FIT Hon Teng delivered in-line FY23 results and upbeat FY24E guidance. It posted FY23 revenue of US$4,196mn (-7% YoY) and net profit of US$130mn (- 24% YoY), largely in-line with guidance, mainly due to softer demand for traditional servers/PCs and optimization in networking segment. Gross margin recovered to 19.2% thanks to a better product mix and strong execution of the "3+3 Strategy". For FY24E, mgmt. guided double-digit YoY growth for revenue and gross profit, backed by multiple new product ramp-up (DDR5/CPU sockets/high-speed connectors/TWS) and integration of Voltaira auto electronics business. We expect FIT's revenue/net profit to rebound 12.2%/41.6% YoY in FY24E. We lift our FY24-25E EPS by 4-9% to factor in the strong business outlook and better margin recovery. Reiterate BUY with new TP of HK$2.21 based on the same 11x FY24E P/E.

FY23 earnings mostly in line. FIT released FY23 results with revenue of US$4,196mn (-7% YoY) and net profit of US$130mn (-24% YoY). The revenue growth was mainly driven by EV segment (+100% YoY) due to Voltaira merger, but was offset by a decline in networking segment (-44% YoY) for product portfolio optimization and traditional server weakness. GPM came in at 19.2% (vs. 16.9% in FY22) thanks to an improving product mix and strong execution of the "3+3 Strategy". An opex ratio of 14.4% was slightly higher than its original target of 14.0%.

Strong FY24E outlook: Voltaira synergy, AI servers/networking (CPU sockets/DDR5 connectors/high-speed connectivity) and AirPods ramp-up. Mgmt. guided double-digit growth for topline and gross profit, driven by sales synergy from Voltaira auto business and multiple new product launches into FY24E. Mgmt also expected US key customer's TWS orders to be delivered in 3Q24E in Vietnam and India factories. Overall, we expect FIT's revenue/net profit to rebound 12.2%/41.6% YoY in FY24E.

Solid growth with margin recovery in FY24E; positive on multiple growth drivers. FIT's share price reacted positively to the strong guidance after earnings. Trading at 6.6x/5.2x FY24E/25E P/E, its valuation remains attractive in our view, given higher earnings visibility and solid growth drivers. We maintain BUY with new TP of HK$2.21, based on the same 11x FY24E P/E. Near-term catalysts include progress of TWS shipments and AI server product updates.