To The Moon

Liu Yang Wei, Chairman of Hon Hai Precision Industry,$Hon Hai Precision Industry Co. Ltd.(HNHAF)$   recently delivered an inspiring speech.

He stated that this year, the company will "grow a second leg" and stand firmly on both, referring to AI servers as a key pillar of growth.

He also projected annual revenue between TWD 7 trillion and TWD 8 trillion, signaling a potentially outstanding year for the company— which is actually very positive for Nvidia $NVIDIA Corp(NVDA)$ .

Hon Hai Precision Industry stock price is also expected to perform well. Let's look at the target prices set by foreign investors. Wow, they're all above TWD200, with Citigroup setting the highest at 260, and the first point at TWD232.

Does Hon Hai Precision Industry have a chance? Everyone should start strategizing now. Let's consult "Four Middle Brothers".

Hon Hai Precision Industry has long been a favorite among investors, with substantial holdings. However, its stock price has been on a decline since the end of last year.

Many institutional investors have sold off their shares, fearing that Terry Gou's return could destabilize the company, similar to the situation during his 2023 presidential bid, which led to a drop in stock price to around TWD90 due to tax investigations by Chinese authorities. When politics come into play, institutional investors tend to become very cautious.

But now, there's no need to worry. Why? Because during the recent board meeting, it was clear that Gou, who only holds less than 20% of the shares, did not nominate himself or anyone else for the board, indicating he won't be returning.

With this shadow gone, foreign investors are buying back in. You can see that recently, they've started to raise their target prices for Hon Hai Precision Industry.

Now, investors can focus on the company's fundamentals without political interference. Additionally, listen to what Chairman Liu says. He's likely to serve another three years, and last year, despite internal opposition, he's now in a stronger position to lead the company forward.

He talked about the second leg being AI Servers, predicting significant growth due to the rollout of the GB200 series, with expectations for the GB300 to follow, boosting performance. He's confident that this year's revenue will exceed TWD 7 trillion, potentially reaching TWD 8 trillion, depending on market conditions.

He's also very keen on the potential merger between Nissan and Mitsubishi, but since Nissan isn't keen, Hon Hai is now in talks for cooperation using CDMS (Contract Design and Manufacturing Services) without entering the car brand or ownership, focusing on design and manufacturing aspects.

He's already in discussions with several Japanese manufacturers and expects good news within one to two months. This could be crucial for Hon Hai to meet its 2025 goal of capturing 5% of the global electric vehicle market, which they haven't yet achieved.

In terms of stock valuation, after dropping to around TWD160 last year, it's now recovering. Analysts estimate an EPS of around TWD40 to TWD50 for this year. Besides, look at companies like Quanta Computer $Quanta Computer, Inc.(QUCCF)$  , expected to do well due to similar reasons like AI servers contributing to record revenues.

So, for Hon Hai Precision Industry, focus on the fundamentals; there could be significant growth.

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