[ET Net News Agency, 28 November 2019] Credit Suisse lowered its target price for FIT
Hon Teng (06088) to HK$3.7 from HK$5.1 and maintained its "outperform" rating.
The research house said FIT transferred its optical transceiver R&D unit back to
Broadcom, and will no longer bear the R&D costs, and will only maintain the supply chain
and distribution functions. Credit Suisse expects short-term margin pressure due to a
shift into the distribution business.
Credit Suisse expects 400G ramp-up to be further delayed given (1) the US customer plans
to add 2-3 more suppliers, (2) Innolight has a higher allocation on better delivery.
However, the optical transceiver business remains a small segment, thus, the impact is not
significant.
Credit Suisse lowered its EPS forecasts for 2020/21 by 2.5%/3.6%, attributable to the
lower margin for optical transceiver distribution businesses. (KL)