Shanxi Securities: Initiates Coverage of Foxconn Industrial Internet with Buy Rating

Shanxi Securities Co., Ltd. Gai Binhe recently conducted research on Industrial Fulian and released a research report titled “AI Servers and High-Speed Switches Show Strong Growth, Company Performance Accelerates,” giving Industrial Fulian a “Buy” rating.

Industrial Fulian (601138)

Event Description

On March 10th, the company released its 2025 annual report, showing that in 2025, the company achieved revenue of 902.887 billion yuan, a year-on-year increase of 48.22%. Net profit attributable to the parent was 35.286 billion yuan, up 51.99% year-on-year, and non-recurring net profit was 34.188 billion yuan, up 46.02%. In Q4 2025, the company achieved revenue of 298.956 billion yuan, a 73.04% increase year-on-year, with net profit attributable to the parent of 12.799 billion yuan, up 58.49%, and non-recurring net profit of 12.531 billion yuan, up 44.36%.

Event Commentary

The sustained strong demand for AI computing power has accelerated the company’s full-year performance. Under the high prosperity of the AI server market, the company’s market share among major clients has steadily increased, driving revenue growth to accelerate quarter by quarter in 2025. As of the end of 2025, the company’s contract liabilities reached 3.113 billion yuan, an increase of 22.61% from 2.538 billion yuan at the end of September 2025, and a 790.26% increase from the end of 2024, reflecting strong customer order demand.

This sustained demand will support the company’s future revenue growth. In 2025, the company’s gross profit margin was 6.98%, down 0.30 percentage points from the previous year. The company maintained good cost control, with sales, management, and R&D expense ratios decreasing by 0.04, 0.18, and 0.51 percentage points respectively compared to the previous year. Benefiting from this, the company’s net profit margin in 2025 was 3.91%, up 0.10 percentage points year-on-year.

Cloud computing business achieved both volume and price increases, with high-speed switches becoming a new growth engine for communication network equipment. Looking at the segments: 1) Cloud computing: revenue reached 602.679 billion yuan in 2025, up 88.70% year-on-year, accounting for 66.7% of total revenue, becoming a key growth driver. Notably, revenue from AI servers for cloud service providers increased over threefold, with products related to GPU and ASIC solutions also growing rapidly; 2) Communication and mobile network equipment: revenue was 297.851 billion yuan, up 3.46%. As data center networks transition to 400G/800G and even 1.6T, the company’s 800G+ high-speed switches saw a 13-fold year-on-year increase in 2025, maintaining the industry’s top market share. Additionally, leveraging structural opportunities from AI smartphones, shipments of terminal precision components grew double digits, consolidating the company’s leading position in the supply chain of core clients; 3) Industrial Internet: The company actively responded to national calls for integrating 5G, industrial internet, and AI, adding four lighthouse factories in 2025 across sectors such as home appliances, auto parts, pharmaceuticals, and new energy. In 2025, revenue from industrial internet was 694 million yuan, down 26.15% year-on-year.

Investment Recommendations

The company continues to benefit from strong demand for AI servers. As a leading global ODM manufacturer of AI servers, it is expected to hold significant market share in GB/VR series servers. Projected EPS for 2026-2028 are 2.89, 4.08, and 5.10 yuan respectively. Based on the March 19th closing price of 50.46 yuan, the PE ratios for 2026-2028 are 17.5x, 12.4x, and 9.9x. The rating remains “Buy - A.”

Risk Factors

Lower-than-expected downstream demand for AI servers, slower-than-expected shipment progress of NVIDIA’s cabinet-level products, high customer concentration risk, fluctuations in the prices of key raw materials, and exchange rate volatility.

Latest profit forecasts are detailed as above.

In the past 90 days, 15 institutions have issued ratings for this stock, with 12 recommending “Buy” and 3 recommending “Hold.” The average target price among institutions over this period is 81.08 yuan.

This content is compiled from public information by Securities Star, generated by AI algorithms (Wangxin Algorithm Record No. 310104345710301240019), and does not constitute investment advice.