External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>We hosted an investor meeting with FIT’s mgmt. this week. Investors are interested in 2H23 outlook, technology trends and investment roadmap.</li><li>Overall, we remain positive on margin recovery in FY24/25E following higher investment into new products in FY23E.</li><li>We expect opex ratio to peak at 14.0% in FY23E and improve to 13.2%/12.8% in FY24/25E on economies of scale of new highermargin products. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We hosted an investor meeting with FIT’s mgmt. this week. Investors are interested in 2H23 outlook, technology trends and investment roadmap.Overall, we remain positive on margin recovery in FY24/25E following higher investment into new products in FY23E.We expect opex ratio to peak at 14.0% in FY23E and improve to 13.2%/12.8% in FY24/25E on economies of scale of new highermargin products. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

FIT Hon Teng (6088 HK) – Multiple Growth Drivers and Margin Recovery in FY24/25E

<ul><li>We discussed with mgmt. after recent correction this week.</li><li>Overall, we believe market concerns on higher opex are overdone since we expect opex ratio to peak at 14.0% in FY23E and improve to 13.2%/12.8% in FY24/25E on the back of economies of scale and improving efficiency.</li><li>We also expect FIT’s product expansion into higher-margin 400G optical cable/acoustics/EV components through Prettl’s acquisition would drive NPM recovery from 3.2% in FY23E to 3.6%/4.0% in FY24/25E. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We discussed with mgmt. after recent correction this week.Overall, we believe market concerns on higher opex are overdone since we expect opex ratio to peak at 14.0% in FY23E and improve to 13.2%/12.8% in FY24/25E on the back of economies of scale and improving efficiency.We also expect FIT’s product expansion into higher-margin 400G optical cable/acoustics/EV components through Prettl’s acquisition would drive NPM recovery from 3.2% in FY23E to 3.6%/4.0% in FY24/25E. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

FIT Hon Teng (6088 HK) – Recent Sell-Off Overdone

<ul><li>FIT Hon Teng announced 1Q23 results with net loss of US$ 9.3mn, in-line with earlier preview and our estimates, mainly due to weak seasonality and US$5mn expense on digital transformation.</li><li>Despite near-term pressure for digitalization and overseas expansion, mgmt. maintained FY23E sales/earnings guidance, and expected earnings recovery in 2H23E, driven by new iPhone, 400G module, CPU socket and Prettl’s M&amp;A integration.</li><li>We slightly revised FY23-25E EPS by 1-5% to reflect higher expense for business transformation. The stock now trades at 9.2x/7.5x FY23E/24E P/E. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

FIT Hon Teng announced 1Q23 results with net loss of US$ 9.3mn, in-line with earlier preview and our estimates, mainly due to weak seasonality and US$5mn expense on digital transformation.Despite near-term pressure for digitalization and overseas expansion, mgmt. maintained FY23E sales/earnings guidance, and expected earnings recovery in 2H23E, driven by new iPhone, 400G module, CPU socket and Prettl’s M&amp;A integration.We slightly revised FY23-25E EPS by 1-5% to reflect higher expense for business transformation. The stock now trades at 9.2x/7.5x FY23E/24E P/E. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

FIT Hon Teng (6088 HK) – Weak 1Q23 as Expected

Thematic (Sector/Industry)

<ul><li>Apple reported FY2Q23 (CY1Q23) with EPS of US$1.53 (-1% YoY) and revenue of US$94.8bn (-3% YoY), which are 7% and 2% above consensus, mainly driven by strong iPhone sales in emerging markets and record revenue from Service, partially offset by FX headwinds and weak macro on Mac/iPad sales.</li><li>Looking into FY3Q23E, mgmt. expects revenue to perform similarly to FY2Q23 with macro/FX pressure.</li><li>Given resilient outlook and iPhone’s share gain during industry downcycle, we remain positive on Apple supply chain over Android camp in 2H23E with upcoming catalysts from MR device launch in WWDC in June. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Apple reported FY2Q23 (CY1Q23) with EPS of US$1.53 (-1% YoY) and revenue of US$94.8bn (-3% YoY), which are 7% and 2% above consensus, mainly driven by strong iPhone sales in emerging markets and record revenue from Service, partially offset by FX headwinds and weak macro on Mac/iPad sales.Looking into FY3Q23E, mgmt. expects revenue to perform similarly to FY2Q23 with macro/FX pressure.Given resilient outlook and iPhone’s share gain during industry downcycle, we remain positive on Apple supply chain over Android camp in 2H23E with upcoming catalysts from MR device launch in WWDC in June. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology Sector – Apple FY2Q23 Beat on Strong IPhone and EM

Research from Quam Securities, Quam Securities

Quam Securities Research

Research from Quam Securities

Quam Securities

Since its inception in 1986, Quam Securities Limited (Quam Securities) has grown to become one of the few mid-tier securities brokerages in Hong Kong with global execution capabilities for both private and institutional clients. It boasts a well-established network in Greater China including Taiwan and in major world markets through the Global Alliance Partners (GAP). Quam Securities is well-positioned not only to harness and drive business within the China Tonghai International Financial Limited but also between China and the world markets.

<div><div><div><div><ul><li>Despite shipment continued to fall y/y, all major markets experienced deceleration in decline.</li><li>DMs like US &amp; W Europe did better with more material deceleration, which helped Apple to solidify its market position.</li><li>EMs remained weak with APAC (ex-Jap &amp; China), CEE and MEA falling 17-20% y/y, which was a bigger headache to the Android camp, especially the Chinese players, among which, Xiaomi had relatively poorer performance.</li></ul></div></div></div></div>

Despite shipment continued to fall y/y, all major markets experienced deceleration in decline.DMs like US &amp; W Europe did better with more material deceleration, which helped Apple to solidify its market position.EMs remained weak with APAC (ex-Jap &amp; China), CEE and MEA falling 17-20% y/y, which was a bigger headache to the Android camp, especially the Chinese players, among which, Xiaomi had relatively poorer performance.

Smartphone – Global Vs China Decelerated Downtrends

Taiwan

FIT Hon Teng Limited manufactures and distributes electrical components. The Company produces backplane connectors, memory cards, sockets, terminal blocks, and other products. FIT Hon Teng markets its products throughout Taiwan.

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FIT Hon Teng (6088 HK)