FIT Hon Teng 1Q25 revenue grew 14% YoY and net profit declined 38% YoY, below our expectations and tracking 22%/3% of our FY25E estimates. The weaker-than-expected results were mainly due to lower GPM and FX headwinds in 1Q. Looking ahead, given US tariff impact and macro uncertainties, mgmt. lowered 2025 guidance on smartphone (-15% YoY) and System products (-5% to +5% YoY), and guided higher opex for global supply chain alignment. Thus, we trim F25-26E EPS by 10-18% to reflect 1Q25 results and lower guidance. Overall, we expect near-term headwinds due to tariff/macro weakness and slower server upgrade, while we remain positive on AI server product demand, AirPods capacity ramp-up in India and auto M&A progress in 2025E. Trading at 8.3x/6.3x FY25/26E, the stock is attractive in our view. Maintain BUY with new TP of HK$3.48 based on the same 14.1x FY25E P/E.
　　solid revenue but weaker earnings in 1Q25 due to GPM/FX headwinds.
　　FIT’s 1Q25 revenue (+14% YoY) was largely in-line while net profit (-38% YoY) was below our expectations due to lower GPM at 19.5% (vs 20.3% in 1Q24) and higher opex due to NPI ramps and FX headwinds. By segment, smartphone/system revenue declined 6%/4% YoY, while networking/ computing/automobility posted strong growth of +46%/13%/89% YoY.
　　2Q25/2025 outlook: weaker smartphone/system products, AI server products in progress, and AirPods ramp in India. Looking ahead to 2Q25E,
　　mgmt. guided -15% YoY in revenue for smartphone/system products, +15% YoY for networking/mobility, and 5-15% YoY for computing. For 2025 guidance, while networking(server)/computing(PC)/automobility outlook remains solid, mgmt. revised down 2025 guidance for smartphone sales (- 15% YoY) and System products (-5% to +5% YoY) sales, and raised opex guidance for global supply chain alignment. For new AI server products, FIT showcased strong product portfolio in GTC 2025 in March, including high- speed cables, new sockets, power busbar, and cooling components (UQD, cold plates). Overall, we expect FIT’s revenue/net profit to grow 15%/46% YoY in FY25E.
　　Near-term headwinds on tariff/macro and server spec upgrade mostly
　　priced in; Maintain BUY. We revise down our FY25/26E EPS forecasts by 10-18% to reflect 2025 guidance and market uncertainties. We believe new product pipeline and order wins remain solid with key growth drivers from AI server/AirPods/auto segments. Our new TP of HK$3.48 is based on the same 14.1x FY25E P/E. Maintain BUY. Upcoming catalysts include AI server shipments, AirPods ramp-up and US tariff progress.