FIT will announce its 1H23 results next week. We estimate 1H23E revenue of US$1,823mn (-13% YoY) and net loss of US$11.9mn, largely in-line with earlier guidance, given weak seasonality of consumer electronics, higher expense for digital transformation and overseas capacity expansion. Looking into 2H23E, we expect a back-end loaded 2H23E with QoQ recovery, backed by better product mix (CPU socket, DDR5 connector, acoustics, Prettl business) and new iPhone model launch. Despite near-term opex pressure, we think 1H23 earnings weakness has been reflected in share price, and we are positive on FIT's improving product mix and margin expansion trend in 2H23E. Trading at 8.1x/6.6x FY23/24E P/E (1-sd below 5-year average), we think risk-reward is attractive. Maintain BUY with TP HK$2.18 (11x FY24E P/E). Upcoming catalysts include new product ramp-up and TWS project wins.

1H23 preview: expect weakness in-line with guidance. We estimate 1H23E revenue of US$1,823mn (-13% YoY) and net loss of US$11.9mn, largely in-line with its guidance announced in March. By segment, we expect smartphone/networking/computing/EV mobility/System product revenue to deliver -19%/-40%/-3%/-3%/+1% YoY, given weak smartphone demand along with product mix changes in networking segment. We also expect near-term earnings pressure on higher opex in 1H23E, which will improve HoH in 2H23E.

2H23E outlook: earnings poised to recover driven by Prettl business, iPhone launch, new CPU socket and DDR5 connectors. FIT announced the completion of Prettl M&A deal in early July, which will be consolidated in 2H23E. Mgmt. guided higher-margin Prettl business will drive margin recovery in 2H23E. We also expect revenue upside from new CPU socket, DDR5 connector, acoustic products, new iPhone and smart accessories in 2H23E. In terms of opex, we estimate FIT's opex ratio to peak at 14% in FY23E and then moderate to 13.2%/12.8% in FY24/25E.

Attractive risk/reward; Maintain BUY. We maintain our TP of HK$2.18 based on 11x FY24E P/E (33% below 5-year hist. avg.). Trading at 8.1x/6.6x FY23E/24E P/E (1-sd below 5-year ave.), we think risk-reward is attractive, given multiple growth drivers and earnings recovery in FY24/25E. Catalysts include new product ramps and TWS order wins.