Everbright Securities has reiterated its "Buy" rating on FIT HON TENG (06088), maintaining its 2025 net profit forecast at $171 million. Given the company's substantial progress in high-speed interconnect solutions and strong customer recognition, the brokerage has raised its 2026 and 2027 net profit estimates by 23% and 29% to $297 million and $400 million, respectively. As of November 11, the company's market capitalization implies 29x, 17x, and 12x P/E ratios for 2025–2027. Everbright Securities believes FIT HON TENG will continue benefiting from growing demand in AI data centers and automotive cables.
Key highlights from the report include: 1. **Q3 2025 Performance**: Revenue reached $1.324 billion (+13% YoY), with net profit at $74 million (+9% YoY). The net margin slightly declined to 5.62% (-0.2 ppts YoY), attributed to higher contributions from AI server-related products, optimized production efficiency, and stable shipments of high-margin products.
2. **Segment Breakdown**: - Cloud data center and EV businesses grew rapidly (+34% and +116% YoY, respectively), while smartphone revenue declined (-20% YoY). - System terminal products and other consumer electronics outperformed Q3 guidance.
3. **Growth Drivers**: - **Data Center Business**: Revenue rose 34% YoY, driven by AI server demand. The company launched the industry’s first 102.4Tbps CPO connector and showcased AI solutions at the Open Compute Project summit. - **EV Business**: Revenue surged 116% YoY due to One Mobility strategy integration and rising demand for data connectivity/high-power solutions. Partnerships, including with Saudi Arabia’s Al Bassami Transport Group, are accelerating EV charger deployment.
4. **Outlook**: - Data center and EV revenues are expected to grow >15% YoY in Q4 and full-year 2025. - System terminal products revenue is projected to remain stable (-5% to +5% YoY in Q4), with full-year guidance unchanged. - Smartphone revenue may decline further (>15% YoY), while PC/consumer electronics revenue should stabilize (-5% to +5% YoY).
**Risks**: Slower-than-expected recovery in consumer electronics; delays in AI data center expansion; tariff policy changes.