Caitong Securities: First Vendor for Hongteng Precision (06088) to “Increase” Rating Intelligent “Neural Network” Platform

The Zhitong Finance App learned that Caitong Securities released a research report saying that the first coverage gave Hongteng Precision (06088) an “increase” rating. The company is the world's leading connector manufacturer and is optimistic about the leading layout and growth potential in the “AI computing power+electric vehicle” field.

The main views of Caitong Securities are as follows:

Core competency transition

Realize the upgrade from “precision parts” to “system-level interconnection solutions.” With 40 years of connector technology accumulation, the company has formed a full product line covering the entire optical, electric and automotive product line through the “copper to optical, wired to wireless, component to system” iterative path and strategic acquisitions. With a global R&D and manufacturing network, the company has upgraded from a single component supplier to a system solution provider, with one-stop customization capabilities from concept to mass production.

Growth momentum

AI and the automotive business have become the twin engines of growth. The company implemented the “3+3” transformation strategy and achieved remarkable results. The 2025H1 cloud network infrastructure and automotive business surpassed traditional consumer electronics with 35.3% revenue, driving the company through the consumer electronics cycle. Among them, the AI and EV business growth rate (35.7%/102.3%) far exceeded the company's overall revenue level (11.53%).

Technology upgrade

Seize opportunities in the two major incremental markets of AI computing power infrastructure and automotive neural networks. 1) AI side: Benefiting from the high growth of the global optical module market (CAGR > 30%), the company has deployed 224G high-speed interconnection, 800G/1.6T optical modules and CPO solutions, and its products have been introduced to core customers in North America. 2) EV side: With the popularity of 800V platforms and the increase in autonomous driving levels, the value of connector bikes has jumped. The company integrated Voltaira and Auto-Kabel through mergers and acquisitions to establish a “sensor-connection-power management high-voltage” vertical integration layout, and successfully developed emerging blue ocean markets such as Saudi Arabia.

Risk Alerts

The risk of geopolitical and trade friction; the risk of downstream demand fluctuations; the risk of cross-border mergers and acquisitions integration falling short of expectations; the risk of increased industry competition; and the risk of RMB exchange rate fluctuations.