We hosted FIT Hon Teng (FIT) at CMBI Technology Corporate Day on 25 Jun. After 50% rally post-Computex and WWDC in early June, investors expressed strong interests in 1) AI server upside in 2H24/2025, 2) AirPods ramp-up in Vietnam/India, 3) new EV JV and opportunities, and 4) AI PC/phone cycle in 2H24E. Mgmt. stated 2Q24 rev/GPM guidance on track with upside potential in smartphone/networking segments. Overall, we maintain our positive view on FIT’s multiple growth drivers in FY24/25E (AI server connectors, AirPods, EV biz), and expect further upside in AI server content value, general server recovery and AI PC/smartphone upcycle. Maintain BUY with TP under review. n 2Q24/FY24E guidance on track with potential upside in smartphone and networking segments. Mgmt. stated that 2Q24 rev/GPM was on track with guidance with further upside in networking and smartphone segments. For 2H24E, FIT is positive on iPhone replacement cycle backed by Apple Intelligence, and potential order wins in AI server connectivity (e.g. copper cartridge, switch tray) apart from US$500-1,000 content value on compute tray which will present significant revenue upside in networking segment ahead.
　　2025 growth drivers: AirPods, AI server connectors/cables and auto business. Mgmt. highlighted three major growth drivers in 2025: AirPods, AI server connectors/cables and auto business. Following ramp-up of first AirPods production line in Vietnam, mgmt. expected six more lines in India to roll out gradually in 2025. In auto biz, FIT recently established a joint venture with XYPower Technology Co., Ltd. to enter EV charger market in Europe. Leveraging the technology know-how and strong client base of global tier-1s from Voltaira, mgmt. expected the new JV will launch new product series including fast charging station and AC/DC chargers, and start to expand new projects with local governments in Europe in 2025.
　　More business upside in 2H24/2025; Reiterate BUY. We believe FIT’s “3+3 strategy” in 5G+AIoT, EV and audio will continue to drive business growth in 2024/25E, backed by AI servers/PC/phone upcycle, Honhai’s leadership in AI server/iPhone, and M&A expansion in auto connectors. Trading at 14.3x/10.8x FY24/25 P/E, we think valuation remains attractive, vs 51%/33% EPS growth in FY24/25E. Near-term catalysts include AI server order wins, AirPods progress, and AI iPhone/PC upcycle.