Hon Hai Precision Industry Co Ltd

2317: XTAI (TWN)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	TWD 393.00	Khbw	Pswvcvlv

Hon Hai's Steady Recovery

Apr 1, 2021

We are raising Hon Hai's fair value estimate to TWD 109 from TWD 95 previously, largely from adjusting slightly better margin assumptions in fiscal 2021 onward, due to further vertical integrations among its subsidiaries in the component space. This is despite the fourth quarter’s gross margin tracking lower than our expectation, largely due to product mix changes and foreign exchange impact. Our fair value estimate of TWD 109 implies a multiple of 10.7 times 2021 earnings versus Pitchbook consensus of 14.8 times 2021 price/earnings.

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