We maintain the investment rating as "Buy" but set TP to HK$1.65. We forecast FY24-FY26 EPS to be US$0.023/ US$0.029/ US$0.035, respectively. Considering future performance growth rate and historical valuation level, we give a 9.0x 2024 PER, corresponding to TP of HK$1.65 and maintain the investment rating as "Buy".

FIT Hon Teng's (the "Company") FY23 results were in line with our expectations. Operating revenue in FY23 decreased 7.4% yoy to US$4,196 million. Shareholders' net profit decreased 23.5% yoy to US$130 million.

"3+3" strategy will provide strong impetus for the Company's development. The Company implements "3+3" strategy, promoting the development of EVs, 5G AIoT and acoustics. In terms of EV business, the trend of electrification and intelligentization is putting forward higher requirements for the number and quality of automotive connectors. With a complete range of connector products, global layout and the assistance of MIH, EV business will become a strong driving force for its development. In terms of audio business, the Company has a mature acoustic product portfolio and it has become a supplier of TWS product of North American customer. Explosion of AI server brings huge demand for high-speed connection; thus, we expect the Company to benefit from the construction of data centers promoted by AI development, and the corresponding copper-based and optical-based products will face a huge market demand. The Company expects that Revenue Mix from EV Mobility, new Generation 5G AIoT and Audio will reach 30% in 2024 and 40% in 2025.

Product expansion depth of EV mobility business is expected to exceed market expectation. The Company has completed the acquisition of SWH and renamed it as FIT Voltaira, one of the leading manufacturers of sensor, connectivity and electrification solutions and has long served automotive OEMs, global large-scale tier-1 and tier-2 automotive system suppliers. The Company's product matrix will be further enriched, and the Company's layout in Europe will greatly accelerate; the Company is likely to obtain more European and American customers. In addition, the Company is expected to further develop partners and customers through MIH. Therefore, we believe that the development of EV mobility business will exceed market expectations.

Catalysts: Further expansion of customer base; massive production of new EV mobility products; expansion in AI market.

Risks: Slower than expected expansion of EV mobility business; less than expected penetration of TWS products; less than expected demand for servers and storage.