Caitong Securities initiated coverage on FIT HON TENG (06088) with an "Add" rating, identifying the company as a globally leading connector manufacturer with promising prospects due to its advanced positioning and growth potential in the "AI computing power + electric vehicle" sectors. The core views from Caitong Securities are outlined below.
A leap in core capabilities has enabled an upgrade from "precision components" to "system-level interconnection solutions." Leveraging four decades of expertise in connector technology, the company has expanded its portfolio to cover optical, electrical, and automotive product lines through an iterative path of "copper to optical, wired to wireless, component to system," complemented by strategic acquisitions. Supported by a global R&D and manufacturing network, FIT HON TENG has evolved from a single-component supplier into a system solution provider, offering end-to-end customization from concept to mass production.
Growth momentum is now driven by AI and automotive businesses, which have become dual engines for expansion. The company's "3+3" transformation strategy has yielded significant results. In the first half of 2025, revenue from cloud network infrastructure and automotive businesses accounted for 35.3% of total revenue, surpassing traditional consumer electronics for the first time and helping the company navigate the consumer electronics cycle. Notably, growth rates for AI and EV businesses (35.7%/102.3%) far exceeded the company's overall revenue growth of 11.53%.
Technological upgrades are capitalizing on opportunities in two major growth markets: AI computing infrastructure and automotive neural networks. 1) On the AI front: Benefiting from the high growth of the global optical module market (CAGR >30%), the company has deployed 224G high-speed interconnects, 800G/1.6T optical modules, and CPO solutions, with products already adopted by key North American customers. 2) On the EV front: As 800V platforms become widespread and autonomous driving levels advance, the value of connectors per vehicle has surged. Through the acquisitions and integration of Voltaira and Auto-Kabel, the company has established a vertically integrated layout covering "sensing-connection-power management-high voltage," successfully tapping into emerging blue-ocean markets such as Saudi Arabia.
Risk factors include geopolitical and trade friction risks; fluctuations in downstream demand; risks associated with cross-border M&A integration falling short of expectations; intensifying industry competition; and volatility in the RMB exchange rate.
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