FIT Hon Teng posted 3Q24 revenue/earnings growth of 1%/24% YoY, largely in-line with guidance and with 9M24 tracking 69%/55% of our FY24E estimates.
　　We are encouraged by continued NPM recovery to 5.8% in 3Q24 (vs 1.1%/2.0% in 1Q/ 2Q24) backed by higher-margin AI server products, better expense control and improving operating efficiency. We maintain our positive view on GB200 server rollout and mobility M&A progress into 4Q24/2025E. Mgmt. will host an analyst call at 9:00am HKT on 13 Nov (link), and we will look for details on 1) GB200 AI server product updates and design wins, 2) 4Q24/2025 segment guidance updates, 3) Auto Kabel M&A progress, 4) AirPods project updates in Vietnam/ India plants.
　　3Q24 results in-line, with solid earnings growth. FIT Hon Teng posted3Q24 revenue/net profit growth of 1%/24% YoY, largely in-line with prior guidance, which is backed by a better product mix with AI server product rollout, improving cost control and operating efficiency. For 9M24, revenue/net profit grew 10%/119% YoY.
　　4Q24E outlook: GB200 AI server products to kick off; further upside inoperating efficiency. For 4Q24E, we expect FIT’s GB200 AI server products (e.g. connectors/cables, power busbar) to kick off with small volume shipments in 4Q and mass production to start in 1Q25E. We also expect more product qualifications for GB200 servers will be secured in 4Q24/1Q25E, driving revenue upside from connectivity/cooling/power- related products. We also believe opex ratio will reach 15-16% in FY24E, which will boost OPM to 5.5% in FY24E (vs. 4.9% in FY23). Overall, we expect FIT’s revenue/net profit to rebound 12%/42% YoY in FY24E.
　　Expect more updates on 4Q24/2025 guidance and AI server/AirPods/mobility business; Reiterate BUY. Overall, we maintain a positive view on FIT’s FY24/25E business outlook. During analyst call at 9:00am HKT today, we will look for more colours on 1) GB200 AI server product updates and design wins, 2)4Q24/2025 segment guidance updates, 3) Auto Kabel M&A progress, 4) AirPods project updates in Vietnam/India. Maintain BUY with a target price of HK$4.25.