Hon Precision (7769.TW): Secular growth intact, with more upside from higher content expansion

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Hon Precision (7769.TW): Secular growth intact, with more upside from higher content expansion

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30 Jul 2026 12:46:47 ET │ 15 pages

Hon Precision (7769.TW)

Secular growth intact, with more upside from higher content

expansion

CITI'S TAKE

Hon’s 2Q26 net profit of NT$5,476m (+18% QoQ/+122% YoY) came in

stronger than our and Street (Bloomberg) expectation by 7-10% as revenues

Buyreached a quarterly record high of NT$13.8bn. Nonetheless, OPM declined

to 48.5% (vs. 1Q26’s 50%) and missed our expectation as it incurred higher Catalyst Watch: Upside, expires 27-AUG-26

stock-based compensation expense, which Hon views as only a one-time Price (30 Jul 26 13:30) NT$5,620.00

event. Looking ahead, we expect continued capacity ramps to support the

Target price NT$11,000.00stronger ATC handler deliveries for its Google TPU, Tesla AI5, and AMD CPU

projects in 2H26. For 2027, aside from solid unit shipment growth, we see Expected share price

95.7%upside coming from more content value growth, driven by higher adoption return

of large packaging tray, higher thermal requirement for next generation AI Expected dividend yield 0.6%chips, and rising AOI adoption. We reiterate our Buy rating.

Expected total return 96.3%

Strong capacity expansion on track (+50% in 2027) — Hon raises 2026 full-year Market Cap NT$1,011,207M

capacity growth from +40% to +45% now and targets a +50% capacity growth for US$31,249M2027. By location, 15% of total new capacity addition will come online in 1Q27 at its

China factories, 15% addition from its existing Taichung main plants, and 20% from

its newly acquired Taichung plant from 1Q27 onwards. Hon is also seeing

lengthening order visibility as supported by ongoing OSATs customers new

expansion in US/SG/TW and expanding AI chips demand into CPU and ASIC.