Hon Hai Precision's fundamentals remain resilient; family shareholding adjustments are insignificant. AI order visibility supports through 2027.

Bullish on AI Long Positions, Why Are Analysts Unfazed by Family Holdings Reduction?

Electronics manufacturing giant Hon Hai Precision (2317) has recently become a market focus, but the attention is not on negative news; rather, it’s on changes in family members’ shareholdings. The investment company represented by former Chairman Terry Gou’s daughter, Guo Xiaoling, has filed with the stock exchange to report the planned sale of 5,180 Hon Hai shares through regular trading from December 4 to January 3 next year. Based on the closing price of 222 NT dollars at that time, the total amount is approximately 1.15 billion NT dollars.

At first glance, a family member’s reduction in holdings might trigger market speculation. However, several analysts have poured cold water on this, pointing out that this move is purely a personal financial planning adjustment and has no connection to the company’s operational outlook. Why so confident? The reason is simple—5,180 shares account for a negligible portion of Hon Hai’s average daily trading volume of over 100,000 shares, and Terry Gou himself still holds about 1.74 million shares. This disposal is essentially insignificant. More importantly, analysts are now focusing on more convincing fundamental data.

Revenue Surge, Strong Orders, “Long-term Strength” Logic Unassailable

Setting aside short-term market noise, Hon Hai’s solid fundamentals are the real story. In Q3, revenue surged to NT$2.05 trillion, a record high; earnings per share (EPS) of NT$4.15 also set a new record. In Q4, driven by the traditional peak season and increasing demand for AI servers, revenue is expected to challenge a new high of NT$2.25 to NT$2.35 trillion, with full-year revenue potentially surpassing NT$7.8 trillion.

The key to success lies in the artificial intelligence sector. Hon Hai’s order visibility for AI servers has extended into the second half of 2026 and the first half of 2027. This ample forward order book is enough to dispel any doubts about the company’s prospects. Foreign institutions like Goldman Sachs have also taken notice, recently listing Hon Hai as a priority buy, optimistic about the surge in demand for AI server components and the benefits from Apple’s new product launches, expecting significant year-over-year growth in Q4.

Short-term Revenue “Plateau,” Technical Correction in Stock Price

However, investors should also be aware of short-term technical challenges. After October’s record monthly revenue of NT$895.7 billion, market expectations suggest that November and December may see monthly declines, which could limit upward momentum in the stock price in the near term. From valuation perspective, Hon Hai’s estimated EPS for 2025 is about NT$19, and its P/E ratio remains undervalued relative to its growth potential. Therefore, Hon Hai currently exhibits a “long-term strength, short-term weakness” pattern.

Family Investment Deepening, Group Strategy Remains Unchanged

Another point worth noting is that Hon Hai Group has not relaxed its strategic deployment despite external noise. Its subsidiary, Hongfujin Precision Electronics (Zhengzhou) Co., Ltd., recently announced an investment of about 1.5 billion RMB to acquire a 75% stake in Henan Hongchuang Technology Co., Ltd. This move, approved by the board, is part of long-term investment planning, reflecting the group’s continued strengthening of its manufacturing network in China. This further confirms that the family members’ shareholding adjustments are merely normal asset allocation operations and do not hinder the company’s strategic development.

Conclusion: Return to Fundamentals, Long-term Logic Unchanged

In summary, the change in holdings by Terry Gou’s family members is just an overreaction in market sentiment, far from a warning sign of a fundamental shift. Hon Hai’s true investment value lies in its resilient operations, leadership position in the AI server sector, and order visibility extending into 2027. Investors should focus less on trading chips and more on its technological upgrades and market expansion for long-term gains.

Today, Hon Hai’s stock price rose for the second consecutive day, reaching a intraday high of NT$230 and closing at NT$227, a daily increase of 2.25%, indicating that the market has ultimately returned to a recognition of fundamentals.