Hongzhi Reports First-Nine-Month EPS of NT$3.31 and Plans NT$1.4 Billion Land Purchase

Highlights

Connector manufacturer Hongzhi (宏致, 3605-TW) reported third-quarter net income after tax of NT$244 million and earnings per share of NT$1.42. Earnings per share for the first three quarters reached NT$3.31. The company expects revenue from AI-related high-speed and high-power products to increase steadily as a share of sales, supporting quarter-by-quarter growth in AI revenue. It also approved a land and building purchase in Taoyuan’s Zhongli District for a transaction amount not exceeding NT$1.4 billion, with the aim of expanding production capacity. Robust demand for AI servers and ASICs is supporting shipments of high-speed connectors and high-power products.

Sentiment Analysis

• The article’s overall tone is cautiously positive. Hongzhi reported growth in third-quarter revenue, operating profit and net income compared with the same quarter a year earlier, while first-nine-month revenue and operating profit also increased year over year.


• Management’s outlook adds a positive element: despite a traditional seasonal slowdown in consumer electronics, networking and notebook markets in the fourth quarter, the company anticipates continued demand for AI-related products. It expects revenue from AI applications to grow quarter by quarter.


• The expansion plan signals confidence in future operating needs, but it also involves a substantial planned property purchase and is framed as a response to projected space constraints rather than as a completed expansion. The reported decline in the first-nine-month gross margin compared with the prior year is a moderating factor.


• Overall, the sentiment is positive but measured, reflecting improving operating results and AI demand alongside seasonal softness and investment considerations.

Article Text

Hongzhi (宏致, 3605-TW), a connector manufacturer, reported third-quarter net income after tax of NT$244 million. This represented increases of 21% quarter over quarter and 9% year over year. Earnings per share for the quarter were NT$1.42, while cumulative earnings per share for the first three quarters of the year reached NT$3.31.

The company’s third-quarter revenue was NT$3.294 billion, up 3.06% from the preceding quarter and 23.71% from the same period a year earlier. Gross margin stood at 27.24%, rising 0.37 percentage points quarter over quarter but falling 0.15 percentage points year over year. Operating profit was NT$270 million, an increase of 9.69% quarter over quarter and 83.72% year over year. The operating margin was 8.19%, up 0.50 percentage points sequentially and 2.68 percentage points compared with the year-earlier quarter.

For the first three quarters combined, Hongzhi recorded revenue of NT$9.190 billion, an increase of 17.91% year over year. Gross margin was 26.66%, down 0.31 percentage points from the corresponding period. Operating profit reached NT$663 million, up 44.34%, while the operating margin was 7.22%, a year-over-year increase of 1.32 percentage points. Net income after tax totaled NT$552 million, 4.81% higher than in the same period a year earlier.

Looking ahead to the fourth quarter, Hongzhi expects its AI-related business to continue expanding. The company anticipates a steady increase in the share of revenue generated by high-speed and high-power products used in AI-related applications. It expects this product mix and ongoing shipments to support quarter-by-quarter growth in total AI revenue.

The company noted that consumer electronics, networking and notebook markets are entering their traditional off-season. However, it said global demand for AI servers and ASICs—application-specific integrated circuits designed for particular uses—remains strong. This demand is supporting shipments of high-speed connectivity products, as well as high-power and high-voltage power cables. Hongzhi expects shipment momentum for these products to continue strengthening, helping offset seasonal softness in other markets.

The company’s outlook rests on continued AI-related demand, while its expansion plan addresses anticipated limits on existing Taiwanese production space. Hongzhi’s board approved a purchase of land and buildings in the Shangling section of Zhongli District, Taoyuan City, for a transaction amount not exceeding NT$1.4 billion. The company said it assessed that the operating space at its existing facilities in Taiwan would not be sufficient for its medium- to long-term development.

The proposed property acquisition is intended to meet future operating expansion needs by providing a site for a new factory and strengthening the company’s overall production scale. The announcement describes board approval and the intended purpose of the purchase; it does not state that the transaction has been completed or specify a timetable for construction. The plan accompanies an outlook in which AI-related products are expected to become a larger contributor to revenue, even as some established end markets face seasonal weakness.

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