Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- FIT Hon Teng Ltd (FITGF, Financial) reported a 19.5% year-on-year increase in second-quarter revenues, reaching USD1.1 billion.
- The company's gross profit margin expanded to 20.4% during Q2, achieving their target of 20% on a six-month basis.
- The smartphone segment outperformed prior guidance during the second quarter, benefiting from better-than-expected shipments.
- FIT Hon Teng Ltd (FITGF) is on track to capture more business opportunities from AI and cloud computing, with new AI product launches progressing as scheduled.
- The acquisition of Ccloud is expected to enhance FIT's capabilities in high-speed networking and optic markets, supporting product development for 5G AIoT solutions.
Negative Points
- FIT Hon Teng Ltd (FITGF) slightly lowered its full-year revenue guidance from a low-double-digit to a high-single-digit increase due to changes in product mix.
- The automotive segment faces industry-wide headwinds on EV orders, leading to an adjusted growth pace to single-digit for the third quarter.
- The system products segment is expected to see a slight decline in Q3 and full-year revenue compared to last year due to resource reallocation for new production lines.
- Despite a favorable acquisition cost, the acquisition of the loss-making AK Group raises concerns about potential risks and integration challenges.
- Macroeconomic uncertainties persist, leading to a maintained guidance of a low double-digit decline in smartphone segment orders for the third quarter and full year.
Q & A Highlights
Q: With the growing trend in new AI services utilizing MCIO for PCIE6, has the company taken note of this trend? What are your expectations for this year and the next?
A: Christopher Lu, Global COO & CFO: We recognize the growth trend for MCIO for PCIE6 and have factored AI-related products, including MCIO, into our networking segment budget for the year. We expect it to contribute significantly to next year's growth.
Q: There are rumors that the GB200 and survey 672 delivery has been delayed. How would this affect the demand and what is the impact on FIT?
A: Christopher Lu, Global COO & CFO: We do not comment on specific customers or products. However, we believe the long-term demand for AI remains robust, and FIT can provide the majority of high-speed copper connectivity products required for AI servers.
Q: Can you provide more details about the new AI-related products that have recently been certified?
A: Christopher Lu, Global COO & CFO: We have recently certified our powered bus by liquid cooling products. We are developing tech solutions, backplane connectors, and advanced optical modules, strengthened by our recent M&A.
Q: Has there been any change in the expected total volume of MB-3672 for this year and the next?
A: Christopher Lu, Global COO & CFO: We maintain our outlook that 5G AIoT products will contribute a high-single-digit percentage to this year's revenue.
Q: Can you elaborate on FIT's future strategy for copper and optical products related to AI services?
A: Christopher Lu, Global COO & CFO: We will focus on copper products with specifications that meet high-performance requirements for AI data centers. Our new optical team will support rebuilding our core technology in fiber optic modules.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
