Company Coverage
FIT Hon Teng (6088 HK): 2Q26: Operating Profit Miss; 2026 Guidance Unchanged
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$5.13
HK$9.19
+79.1%
HK$11.04
Analyst
Analyst
Highlights
FIT’s 1H26 revenue/net profit grew 8.3%/20.9% to US$2,496m/US$38m, representing 43%/13% of our full-year estimates respectively.
While management has lowered its 2026 revenue guidance for the consumer interconnect segment due to rising raw material costs, it maintains revenue guidance of high single-digit revenue growth, 20% gross margin and a 70% yoy operating profit growth in 2026, backed by AI product ramp-up.
Maintain BUY but cut target price from HK$11.04 to HK$9.19 based on 20.7x 2027F PE.
Analysis
- 1H26 results. FIT Hon Teng’s (FIT) 1H26 revenue grew 8.3% yoy to US$2,496m, representing 43% of our full-year estimate. This was led by a 55.8% yoy growth for the cloud segment, but partially offset by a 20.6% decline for consumer interconnect segment due to memory supply constraints. Gross margin improved slightly to 19.1% from 18.6% on a higher AI mix, but partially offset by higher raw material prices and AI products capacity ramp-up. Operating profit (excluding non-operating items such as other income) rose 52.6% yoy to US$77m, thanks to gross margin expansion and effective cost control measures. Attributable net profit increased 20.9% yoy to US$38m, representing 13% of our full-year estimate, mainly due to net forex losses. Net margin widened 0.2ppt yoy to 1.5%.
Solid cloud revenue growth. Cloud revenue grew 55.8% yoy to US$552m in 1H26, accounting for 22.1% of sales (vs 15.4% in 1H25), driven by strong demand for AI products such as higher speed connectivity solutions, backplane connectors and liquid cooling solutions. Management maintains its guidance of high double-digit/70% yoy cloud segment revenue growth in 3Q26/2026 respectively, supported by meaningful contribution from 800G/1.6T optical products in 2H26. We are monitoring its cable cartridge shipment in late-26 and expect its optical products to become key long-term growth drivers.
Mixed performance of non-AI segments. FIT expects rising memory costs to continue weighing on consumer interconnect demand, and has revised down its revenue guidance for the segment from flattish growth to double digit decline in 2026. For the smartphone segment, FIT maintains its target of flattish growth in 3Q26 and 2026, thanks to stabilised shipments. The automobility segment continues to face near-term pressure from softened end-market demand while system product shipments are expected to normalise after a strong yoy growth of 14.9% in 1H26 from a low base in 1H25. As such, FIT is maintaining its target of flattish growth for the automobility segment in 3Q26 and 2026 and flattish/low double-digit growth for the system product segment in 3Q26/2026.
2026 guidance unchanged. Management maintains its guidance of high single-digit revenue growth for 2026, supported by continued AI demand, healthy order backlog and capacity ramp-up in 2H26. It also maintains its guidance of operating profit growth of 70% for 2026, backed by a guided 20% gross margin and improved efficiency from capacity ramp-up in 2H26 as it has overcome critical production bottlenecks for new AI products. The company will host FIT Tech Day on 16 Sep 26 to showcase its technology roadmap, AI ecosystem strategy and long-term growth opportunities.
Highlights
FIT’s 1H26 revenue/net profit grew 8.3%/20.9% to US$2,496m/US$38m, representing 43%/13% of our full-year estimates respectively.
While management has lowered its 2026 revenue guidance for the consumer interconnect segment due to rising raw material costs, it maintains revenue guidance of high single-digit revenue growth, 20% gross margin and a 70% yoy operating profit growth in 2026, backed by AI product ramp-up.
Maintain BUY but cut target price from HK$11.04 to HK$9.19 based on 20.7x 2027F PE.
Analysis
- 1H26 results. FIT Hon Teng’s (FIT) 1H26 revenue grew 8.3% yoy to US$2,496m, representing 43% of our full-year estimate. This was led by a 55.8% yoy growth for the cloud segment, but partially offset by a 20.6% decline for consumer interconnect segment due to memory supply constraints. Gross margin improved slightly to 19.1% from 18.6% on a higher AI mix, but partially offset by higher raw material prices and AI products capacity ramp-up. Operating profit (excluding non-operating items such as other income) rose 52.6% yoy to US$77m, thanks to gross margin expansion and effective cost control measures. Attributable net profit increased 20.9% yoy to US$38m, representing 13% of our full-year estimate, mainly due to net forex losses. Net margin widened 0.2ppt yoy to 1.5%.
Solid cloud revenue growth. Cloud revenue grew 55.8% yoy to US$552m in 1H26, accounting for 22.1% of sales (vs 15.4% in 1H25), driven by strong demand for AI products such as higher speed connectivity solutions, backplane connectors and liquid cooling solutions. Management maintains its guidance of high double-digit/70% yoy cloud segment revenue growth in 3Q26/2026 respectively, supported by meaningful contribution from 800G/1.6T optical products in 2H26. We are monitoring its cable cartridge shipment in late-26 and expect its optical products to become key long-term growth drivers.
Mixed performance of non-AI segments. FIT expects rising memory costs to continue weighing on consumer interconnect demand, and has revised down its revenue guidance for the segment from flattish growth to double digit decline in 2026. For the smartphone segment, FIT maintains its target of flattish growth in 3Q26 and 2026, thanks to stabilised shipments. The automobility segment continues to face near-term pressure from softened end-market demand while system product shipments are expected to normalise after a strong yoy growth of 14.9% in 1H26 from a low base in 1H25. As such, FIT is maintaining its target of flattish growth for the automobility segment in 3Q26 and 2026 and flattish/low double-digit growth for the system product segment in 3Q26/2026.
2026 guidance unchanged. Management maintains its guidance of high single-digit revenue growth for 2026, supported by continued AI demand, healthy order backlog and capacity ramp-up in 2H26. It also maintains its guidance of operating profit growth of 70% for 2026, backed by a guided 20% gross margin and improved efficiency from capacity ramp-up in 2H26 as it has overcome critical production bottlenecks for new AI products. The company will host FIT Tech Day on 16 Sep 26 to showcase its technology roadmap, AI ecosystem strategy and long-term growth opportunities.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$5.13
HK$9.19
+79.1%
HK$11.04
Analyst
Analyst
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