Hon Hai (2317 TT, NT$244.50) - Valuation ready for re-rating

Research evidence excerpt

Hon Hai (2317 TT, NT$244.50) - Valuation ready for re-rating

cloud segment (server and networking) will account

for 51% of revenue, or NT$1,155bn, due to accelerated shipment of GB300 rack systems and

Google TPU compute tray. We estimate GB200/300 shipment of 7.5k. The consumer

segment (smartphones, TVs, and game consoles) is expected to account for 31% of revenue,

Source: CMoney or NT$705bn, since the iPhone will enter a product transition period. The computing

What’s changed segment (NBs, DTs, and tablets) will make up 14% of revenue, or NT$302bn, as MacBook

New Old % Neo and DT demand still persists. We expect the component business to account for 5% of

Rating Buy Buy - revenue, or NT$107bn.

Target price (NT$) 343 330 4%

EPS forecast (NT$) 22.84 21.99 4% 1Q26 GM of 6.18%, OpM of 3.57% beat consensus, Fubon’s estimates

Target PE (x) 15.0 15.0 - Hon Hai reported 1Q26 sales of NT$2,119bn (down 19% QoQ, up 29% YoY), GM of 6.18%

(vs. consensus/Fubon’s 5.97%/5.97%), OpM of 3.57% (vs. consensus/Fubon’s

Financial summary Year-end: Dec 31 3.11%/2.84%), and EPS of NT$3.56 (vs. consensus/Fubon’s NT$3.48/3.72), respectively. GM

NT$mn FY25 FY26F FY27F and OpM both beat the consensus and Fubon’s estimates. We think that Hon Hai’s

Net sales 8,103,105 9,900,934 11,748,927 increased self-sufficiency in key components (such as heat sinks, power distribution, and

YoY growth (%) 18.1 22.2 18.7

connectors) successfully offsets the downward pressure on GM caused by the buy-and-sell

Op. profit 259,223 338,966 394,836

financial model. In addition, its Google TPU compute tray has started shipment, which also

YoY growth (%) 29.2 30.8 16.5

improves the GM due to its consignment business terms.Net profit 189,354 262,083 317,354

YoY growth (%) 24.0 38.4 21.1