Company Coverage
Foxconn Industrial Internet (601138 CH): 3Q26: Sustained AI infrastructure demand drives earnings beat
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
Rmb45.22
Rmb77.60
+71.6%
Rmb89.50
Analyst
Analyst
Highlights
- Robust cloud-computing demand and a broadening network-product mix supported better-than-expected revenue and earnings.
- Maintain BUY with a target price of Rmb77.60.
Analysis
- Revenue strength drove earnings beat. Driven by sustained AI compute demand and rising share at its key customers, Foxconn Industrial Internet’s (FII) revenue rose 57.7% yoy and 25.0% qoq to Rmb383.6b, 6.6% above consensus but 10% below our estimate primarily due to differences in its product mix. Gross margin was flat yoy and qoq at 7.0%, in line with consensus but above our estimate due to the aforementioned mix differences. The operating expense ratio ended up slightly above our forecast due to the lower operating leverage, but it was more than offset by the robust gross margins. As a result, net profit rose 60.4% yoy and 26.5% qoq to Rmb16,634m, largely in line with our and consensus estimates.
Highlights
- Robust cloud-computing demand and a broadening network-product mix supported better-than-expected revenue and earnings.
- Maintain BUY with a target price of Rmb77.60.
Analysis
- Revenue strength drove earnings beat. Driven by sustained AI compute demand and rising share at its key customers, Foxconn Industrial Internet’s (FII) revenue rose 57.7% yoy and 25.0% qoq to Rmb383.6b, 6.6% above consensus but 10% below our estimate primarily due to differences in its product mix. Gross margin was flat yoy and qoq at 7.0%, in line with consensus but above our estimate due to the aforementioned mix differences. The operating expense ratio ended up slightly above our forecast due to the lower operating leverage, but it was more than offset by the robust gross margins. As a result, net profit rose 60.4% yoy and 26.5% qoq to Rmb16,634m, largely in line with our and consensus estimates.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
Rmb45.22
Rmb77.60
+71.6%
Rmb89.50
Analyst
Analyst
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This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
