鸿海精密工业买入评级：2026年第一季度营业利润超预期；2026年AI机架出货量翻倍以上；利润率上行潜力

Al rack shipment; margin upside potentialReiterateRating:BUYIPO:305.00TWDIPrice:244.50TWD 1Q26 OP beat on higher GM/OPM; NP dragged by non-op. to seasonal weakness in consumer electronics and a partial shift of server business to aconsignment model offsetting NB pull-ins.GM/OPM of 6.18%/3.57% was above BofAe of 6.05%/3.00% and consensus of 5.99%/3.11%, thanks to a better mix and stringentcostcontrol.Thus,OP(-12%QoQ,+63%YoY)was17%/13%aboveBofAe/consensus.However,onanon-operatinglossofNTs1.6bn,NPwas1%/4%aboveBofAe/consensus.More-than-doubled ‘26 Al rack shipment; switch ramp-up KeyChanges since March and robust GPU/ASIC Al server momentum. It guides for Al rack shipments to grow high-double-digit% QoQ in 2Q26, with more-than-doubled full-year shipments.In addition, Hon Hai expects general server revenue to outperform the industry andincrease double-digit% YoY in 2026. Besides, it expects 800G+ switch revenue to grow2xYoY in 2026 and its CPO switch to begin mass production in 3Q26.Marginupsidefromconsignmentandvertical integration +886 2 2376 3731robert.cheng@bofa.comDoris Kao >>Research AnalystMerill Lynch (Taiwan) Mgmt. indicated that a part of its server business (mainly ASIC Al servers) has shifted toa consignment model, supporting margins and easing working capital needs. Further, the +886 2 2376 3722doris.kao@bofa.comKatherine Zhu >>Research Analyst company continues to increase in-house server components, including liquid cooling,mechanical, and high-speed interconnect. It targets 2026 0PM to exceed the 2025 level.Buy:Alservermomentum,risingcomponent value,val'n Merrill Lynch (Hong Kong)+852 3508 3374kexin.zhu@bofa.comCindy Lo >>Research Analyst We trim our 2026E EPS by 4% on a higher tax rate, lift 2027E EPS by 2%, and introduce2028 estimates to reflect the latest guidance. We maintain our P0 of NT$305 (15x 2H26-1H27E EPS).We reiterate Buy on Hon Hai,given robust Al server momentum,increasing component value, global footprint, and attractive valuation (Exhibit 9).Estimates (Dec) (NTS)2024A2025A2026E2027E2028E Merill Lynch (Taiwan)+886 2 23-763-723cindy.lo3@bofa.com Price This research report provides general information only.No part of this report may be usedorreproducedorquotedinanymannerwhatsoeverinTaiwanbythepressorotherpersons without the expresswritten consentof BofA Securities.>> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst under the FINRA rules.Refer to'Other Important Disclosures'for information on certain BofASecurities entities that take responsibility for the information herein in particular jurisdictions.BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision.Refer to important disclosures on page 11 to 13.Analyst Certification on page 8. PriceObjective Basis/Risk on page 8. For a full list of acronyms, see Exhibit13 iQprofile s" Hon Hai Precision IndustryKey Income Statement Data (Dec)2024A2025A2026E Electronics Manufacturing Services Hon Hai is the world's largest EMS provider, with four key business segments - Smart Consumer Electronics, Cloud &Networking. Computing, and Components & Others. HonHai supplies components, final assembly, and globallogistics for global tech giants, including Apple, Microsoft,Google, HP, Dell, Cisco, and Sony. Hon Hai hasR&D/production sites globally, including Taiwan, China,India, Japan, Vietnam, Malaysia, Czech Republic, Mexico, andthe US. The company was established in Taiwan in 1974. We have a Buy rating on Hon Hai as its gradual moves into high margin/value-added server/components/semibusiness, stronger position in Al server with rising sales,solid balance sheet, and attractive valuation among GreaterChina Al server players. Stock Data Price to Book Value1.8x 2026E Hon Hai's Al server rack shipments, 1Q25-4Q27E Hon Hai's sales breakdown by segment, 2018-28E Exhibit 9: Hon Hai trades at 11.2x 2027E P/E vs. the overall peer average of 16.9xValuation comparison of global leading ODMs/EMS firms, 2026-27E Exhibit 13: Acronyms Expansions of acronyms used throughout the report Expansions of acronyms used throughout the report Acronym Hon Hai Precision Industry (HNHAF) We set our PO at NT$305 (15x 2H26-1H27E EPS), at around 3SD above historical P/E average since 2007. We think the valuation is justified as HH's leading position inEMS/ODM business, improving iPhone momentum with replacement cycle, rising salesfrom Al business, more diversified global footprint than peers to mitigatetariff/geopolitical risk, and improving balance sheet with higher cash dividend payout. and Apple Watch), (2) increasing competition in EMS business from peers, (3) slowersales/earnings delivery in auto/Ev business, and (4) weaker marke