CMBC International: Hung Teng Precision (06088) has strong business prospects, target price raised to 7.33 Hong Kong dollars.

China Merchants Securities International released a research report stating that they are optimistic about the rapid development of Hongteng Precision's (06088) AI server business by 2026. They believe that the company will fully benefit from the architectural upgrades of the GB300/VR200 servers this year, and they are positive about the company's strong product line in the fields of interconnection, power supply, liquid cooling, and CPO. The target price has been raised from HK$6.77 to HK$7.33, with a reiterated "buy" rating, citing the strong business prospects for the company this year, with AI interconnection, power supply, and cooling upgrades as key drivers of growth. The research firm expects that AI-related business revenue at Hongteng Precision will grow at a compound rate of 95% between 2025 and 2027, accounting for 18% of the revenue by 2027 (compared to 6% in 2025). They forecast that in the fourth quarter of 2025, revenue and net profit will grow by 6% and 21% respectively, compared to 13% and 9% growth in the third quarter. Due to the improvement in the AI revenue structure, the research firm expects that Hongteng Precision's gross profit margin and net profit margin in the fourth quarter of last year will return to 20.2% and 5% respectively, compared to the previous year.