Hong Kong stock concept tracking | Foxconn raises Q1 performance guidance AI servers may drive industry chain valuation reassessment (with concept stocks)

Foxconn's parent company, Hon Hai Precision, reported a 3% year-on-year increase in sales in January, and raised its first-quarter performance expectations. The main supplier of NVIDIA's AI servers, and also the world's largest Apple iPhone assembler, reported revenue of 538.7 billion New Taiwan Dollars (16.4 billion US Dollars) last month, reaching a second-highest level for the same period in history. Due to the Chinese New Year falling in January this year and in February in 2024, there is some distortion in the year-on-year data. Hon Hai stated that cloud networking products saw significant growth compared to last month, while components and other products, computer terminal products, and consumer smart products showed decline. The cloud networking category benefited from strong shipments of artificial intelligence cloud products, hence showing significant growth. As the most important artificial intelligence server manufacturer for NVIDIA, Hon Hai's performance is seen as an important indicator for the development of artificial intelligence infrastructure. The company expects quarter-on-quarter growth (compared to the last quarter of December) to be "better than the average level of the past five years", which is a more optimistic forecast compared to the "roughly flat" prediction from last month. At the same time, the company predicts strong year-on-year growth, a more positive outlook than before. AI server industry-related Hong Kong stocks: FIT HON TENG (06088): A subsidiary of the Hon Hai Group, FIT HON TENG is one of the world's leading server connector manufacturers. Company management previously estimated that server/interconnection revenue for 2024 would increase by 15-20% year-on-year, with AI server-related product revenue accounting for 8-10% of total revenue. Analysts at EB SECURITIES, Fu Tianzi and Wang Yun, released research indicating that NVIDIA's GB200 NVL cabinet GPU and NV Switch use copper interconnects, with related connection products having patents and manufacturing barriers. EB SECURITIES believes that with years of technical expertise and lean manufacturing capabilities in the connector industry, the company is likely to be certified by NVIDIA and enter the list of backplane connection suppliers. Zhaojin International released a research report stating that it expects the company's revenue and net profit to increase by 9% and 39% year-on-year respectively. In the fourth quarter of last year, revenue and net profit increased by 5% and 6% year-on-year respectively. Looking ahead to 2025, the company remains optimistic about FIT HON TENG, which will benefit from the capacity expansion of the GB200/300 servers and increased orders for GPU slots, liquid cooling components, and NVLink copper backplanes. In addition, the production of AirPods in India and the consolidation of AK Group's automotive electronics business will also drive revenue growth in 2025/26.