Morgan Stanley: Initial rating on FIT HON TENG (06088) outperforming the market, expecting significant growth in AI revenue in the future.

Morgan Stanley released a research report stating that it is estimated that FIT HON TENG (06088) AI revenue contribution will increase from less than 5% in the 2024 fiscal year to around 25% in the 2027 fiscal year, driving a compound annual growth rate of revenue of 16% and a compound annual growth rate of net profit of over 40%. Morgan Stanley believes that Hongteng is well positioned within the Foxconn group and is expected to benefit from the AI component trend; It initiated coverage on Hongteng with an "outperform" rating and a target price of 8 Hong Kong dollars, equivalent to 22 times and 17 times earnings per share for the 2026 and 2027 fiscal years respectively. Morgan Stanley expects Hongteng's AI revenue to significantly increase in the next 2 to 3 years, believing that this positive development has not been fully reflected in the current stock price, and sees Hongteng as a key driver of AI infrastructure.