We hosted a series of NDR meetings with FIT’s mgmt. this week, and we believe FIT is on track to deliver FY24E guidance of high single-digit revenue growth, 20%+ GPM, and 4.5% OPM. In 4Q24E, we expect FIT’s AI server/networking products (compute tray connectivity/power busbar/CDU connectors) picked up meaningfully backed by GB200 ramp as well as optical modules shipment (400G/800G). Consolidation of Auto-Kabel Group deal is on track to boost FIT’s topline growth in FY25/26E. Overall, we maintain our positive view on FIT’s multiple growth drivers in FY24/25E backed by solid product roadmap and 3- year growth strategy. Maintain BUY with TP of HK$ 4.38. Upcoming catalysts include Auto-Kabel deal progress, GB200/GB300 supply chain updates and GPU socket applications.
　　4Q24 AI server product shipment picked up. During the call, mgmt. reiterated their FY24E guidance of AI server related revenue (7-9% of revenue mix, US$ 500-1000 per compute tray) and 4Q mass production of power busbar and liquid cooling UQD products. 400G/800G optical modules is also on fast track to ramp up and expect next-gen product demand to pick up in 1H25E. Backplane cables/connectors are currently sampling and qualification results are expected in coming months. We also expect potential deployments of GPU sockets in next-gen GB300 AI servers to provide further upside in FY25-26E, considering its global dominant market position in CPU/GPU socket connectivity products.
　　FY25/26E outlook: AI server products and auto business as key growth drivers. Mgmt. announced FY25-27E 3-year guidance in recent 3Q24 earnings call, which demonstrated FIT’s confidence in product roadmap and execution of “3+3” strategy. For AI server/networking segment, we expect potential revenue upside from backplane cable/connectors, switch tray connectivity and GPU sockets. For EV mobility, integration with Auto-Kabel is expected to close by end of 2024, and will contribute meaningful revenue in FY25E. For AirPods, first production line in India is on track to start mass production in early FY25E, and second line will begin construction in 1H25E.
　　Multiple growth drivers in FY24-26E; Maintain BUY with TP of HK$4.38. The stock now trades at 15.8x/9.5x FY24/25E P/E, which we think is attractive compared to 42%/67% EPS growth in FY25/26E. Reiterate BUY with TP of HK$ 4.38, based on 13x FY25E P/E. Upcoming catalysts include Auto-Kabel deal progress, GB200/GB300 supply chain updates and GPU socket order wins.