Guosheng: Maintains "Buy" rating on TIME INTERCON (01729), AI drives high performance growth.

Guosheng released a research report, expecting TIME INTERCON (01729) to record revenue of HKD 32.9/40.9/47.8 billion in 2026-2028, up 166%/24%/17% year-on-year respectively, and net profit attributable to shareholders of HKD 2.2/2.9/3.7 billion. It assigns the company a 20x 2027e P/E, corresponding to a target price of HKD 26, maintaining a "Buy" rating; the bank believes that the company is a deep beneficiary of the high-prosperity cycle of global cloud vendors' AI capital expenditure, with its data center business deeply bound to overseas leading cloud vendors, and AI server demand continuing to ramp up; in addition, the company is rapidly expanding its business footprint through external acquisitions. Guosheng's main points are as follows: Event TIME INTERCON disclosed its 2026 interim results. In 2026H1, it achieved revenue of HKD 10.066 billion (+107.4% year-on-year, all changes hereinafter are year-on-year), gross profit of HKD 1.263 billion (+96.5%), gross margin of 12.6% (-0.6pct, affected by the consolidation of the low-margin copper wire business); profit for the period of HKD 828 million (+163.9%), net margin of 8.2% (+1.7pct); adjusted profit excluding acquisition professional fees was approximately HKD 831 million (+164.2%). By segment The server segment recorded revenue of HKD 4.315 billion (+68.3%), accounting for 42.9% of total revenue; the copper wire segment recorded revenue of HKD 2.891 billion (Dejinchang Group consolidated in December 2025), accounting for 28.7%; the wire assembly segment recorded total revenue of HKD 2.078 billion, of which data center HKD 1.156 billion (+22.8%), medical equipment HKD 492 million (+19.0%), telecommunications HKD 283 million (+8.2%), automotive HKD 123 million (+59.5%, mainly benefiting from customers transferring orders to Mexico after Linkz Mexico commenced production to mitigate the impact of tariffs), industrial equipment HKD 25 million (-6.1%); the digital wire segment recorded total revenue of HKD 783 million (+37.2%), of which network wire HKD 620 million (+42.7%) and specialty wire HKD 163 million (+19.9%). Organic: Over 50% of revenue comes from AI-driven businesses, covering data center fiber optic wire assemblies, high-speed cables and servers Benefiting from the rise of AI, order volumes in both the server segment and the data center fiber optic wire assembly business increased significantly in 2026 Q2, with data center business order volume hitting a record high, and the company is expanding production in China and Vietnam to cope with order growth. In the data center business, the company is one of the few suppliers capable of providing MPO products to Tier-1 customers, and continues to lay out: 1) At the customer level: through factories in China, Vietnam, Mexico and Turkey, it is expanding customers to more global and domestic CSPs; 2) At the product level: dual-density MPO and multi-core fiber optic panels have achieved mass production, driving up average selling prices and profit margins; the product portfolio is extending from Scale-out to Scale-up solutions, covering ultra-complex fiber distribution boxes (Shuffle Box) and next-generation high-density fiber optic connectivity products. In addition, the higher-margin high-speed cable business within the specialty wire segment also benefits from AI investment. External: Landed acquisitions strengthen vertical integration and global layout 1) Copper wire: The company completed the acquisition of Dejinchang Group in December 2025, which is mainly engaged in the manufacture and sale of copper wire products and has a solid production base in Southeast Asia. This acquisition helps the company reduce dependence on a single country for key copper wire supply and facilitates sales of products to the United States. 2) Automotive cable: The company completed the acquisition of the remaining 51% equity interest in Time Singapore on July 31, 2026, and Leoni LCS Group became a wholly-owned subsidiary of the company. Leoni has production and R&D facilities in Europe, North America, North Africa and Asia, and its new Morocco plant will commence production in the second half of 2026. The acquisition will drive the company's transformation from a cable assembler mainly focused on Asia to a global cable platform, while the company is extending Leoni's automotive 800V industrial foundation to AI data center 800V DC liquid-cooled power cables. 3) Medical: The company invested in the UK NHSDIGIHUMAN human resources platform in April 2026 to accelerate entry into the UK NHS market. Risk warnings Risks of international trade friction, risks of raw material price fluctuations, risks of high customer concentration, and risks that AI data center demand falls short of expectations.