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foxconn industrial internet's repurchase plan was approved by the shareholders' meeting.

on september 23, foxconn industrial internet announced that the company plans to repurchase shares for 200 million to 300 million yuan for cancellation to reduce registered capital, and the repurchase price will not exceed 40.33 yuan per share.

foxconn industrial internet is the leading ai server company in china, with the latest market value of approximately rmb 370 billion. the company’s stock price set a new record in july this year. despite the recent correction, it is still up 27% this year.

buyback and cancellation

driven by the strong concept of ai, in july this year, foxconn industrial internet's stock price set a new historical record. the company's market value once exceeded 500 billion yuan, and the stock price rose by more than 70%.

as the ai ​​investment boom receded, the share price of foxconn industrial internet began to fall back, and the share price of foxconn industrial internet fell by nearly 13% in july. in order to stabilize the company's share price, foxconn industrial internet held the 14th meeting of the third board of directors and the 11th meeting of the third board of supervisors on july 29, 2024, and reviewed and approved the "proposal on repurchasing the company's shares by centralized bidding transactions", intending to use its own funds to repurchase at no more than 40.33 yuan per share, with a repurchase amount of no less than 200 million yuan (inclusive) and no more than 300 million yuan (inclusive). the repurchased shares will be used for cancellation to reduce the company's registered capital.

regarding the purpose of the repurchase, foxconn industrial internet stated that based on its confidence in the future development prospects and recognition of the company's long-term value, in order to safeguard the interests of the majority of shareholders and enhance investor confidence, after comprehensively considering the company's financial situation and future profitability, in accordance with relevant regulations, the company plans to repurchase shares through centralized bidding transactions for cancellation to reduce registered capital.

in fact, the repurchase proposal was proposed by zheng hongmeng, the company's chairman and general manager, as early as october 2023, but the repurchased shares in the proposal at that time were used for equity incentives or employee stock ownership plans. this year, the company will use the repurchased shares for cancellation to reduce registered capital, which can increase the company's earnings per share and stabilize the company's stock price, which is conducive to increasing the intrinsic value of the stock and is more helpful to investors.

in recent years, the competition for big ai models has been in full swing, and the continuous expansion of data centers has driven the growth of foxconn industrial internet.

according to the semi-annual report of foxconn industrial internet, the company achieved operating income of 266.1 billion yuan in the first half of the year, a year-on-year increase of 29%; and realized a net profit attributable to the parent of 8.7 billion yuan, a year-on-year increase of 22%. among them, the revenue in the second quarter increased by 46% year-on-year and 24% month-on-month; and realized a net profit attributable to the parent of 4.6 billion yuan, a year-on-year increase of 13% and a month-on-month increase of 9%.

specifically, in the second quarter of 2024, foxconn industrial internet's cloud computing business exploded. cloud computing revenue increased by more than 70% year-on-year and more than 30% month-on-month, accounting for 55% of total revenue. ai server revenue increased by more than 270% year-on-year and more than 60% month-on-month, accounting for 46% of total server revenue, increasing quarter by quarter. in the communications and mobile network equipment sector, ai server-related 400g/800g high-speed switches increased revenue by 70% year-on-year in the second quarter.

guoyuan securities said that as a leading company in the digital economy, foxconn industrial internet will fully benefit from the explosive demand for ai hardware and terminal deployment. with the iteration of large models, ai+ application innovation continues to be implemented in various industries, further promoting the growth of computing power demand, and the demand for ai technology hardware such as servers and high-speed switches is booming. at the same time, as ai advances to the application end, the demand for ai terminal hardware such as ai mobile phones is also continuing to explode.

after the public offering increased its holdings, the stock price fell back by 30%

in this ai wave, there are relatively few domestic companies that benefit, mainly hardware companies, and industrial foxconn is the company with the largest market value. most domestic public funds chasing the ai ​​chain rushed to buy industrial foxconn, which is also the driving force behind the company's stock price surge. industrial foxconn's stock price in 2023 and this year rose by 68.8% and 27.19% respectively.

according to fii, the company currently covers the entire ai industry chain, including upstream gpu modules, substrates, and back-end ai server design and system integration. it is one of the few manufacturers in the industry that can provide full supply chain services from modules, substrates, servers, high-speed switches, liquid cooling systems, complete machines to data centers. through the integration of the industry chain and production bases in important locations around the world, the company occupies a more dominant position in the entire ai industry chain.

publicly offered funds have been significantly increasing their holdings in foxconn industrial internet since 2023, reaching a peak in the second quarter of this year.

according to the data, the top five stocks with the largest increase in holdings by active equity funds in the second quarter were luxshare precision, innolight, byd, eoptolink, and foxconn industrial internet. among them, innolight, eoptolink, and foxconn industrial internet are all companies in the ai ​​industry chain.

in terms of fund holdings, compared with the previous quarter, e-sun and foxconn industrial internet entered the top 20 of active equity fund holdings in the second quarter of this year. wind data showed that by the end of the second quarter, the fund held more than 1 billion shares of foxconn industrial internet, the highest in history, with a shareholding ratio of 5.05%, doubling compared with the first quarter.

specifically, more than 100 public fund institutions hold industrial foxconn, which is favored by institutional investors. among them, e fund, china universal asset management, china asset management, xingzheng global fund, wanjia fund, and huaan fund all hold more than 0.2% of the company. 59 funds under china universal asset management, 57 funds under china asset management, and 50 funds under bosera asset management hold industrial foxconn.

however, after the proportion of industrial and commercial internet of things (icbt) held by public funds hit a record high, the share price of industrial and commercial internet of things (icbt) has continued to fall since the second half of this year, with a drop of nearly 30% in the second half of the year and a market value evaporation of more than 100 billion yuan.

a fund evaluation researcher pointed out that in the second quarter of this year, active equity funds showed a high degree of market consistency in the ai ​​industry chain. the high degree of market clustering should attract investors' attention to avoid excessive trading congestion that may lead to a decline in expected returns.

in the second half of this year, the stock prices of ai industry chain companies experienced a short-term correction. overall, many public funds are still optimistic about investment opportunities in the ai ​​industry chain. a fund manager in shanghai believes that general artificial intelligence technology represented by chatgpt technology is expected to drive global technology into a new round of innovation cycle and enter the era of artificial intelligence. referring to the experience of the pc internet era and the mobile internet era, in the era of artificial intelligence, the technology stock market may last for 5-10 years, and the technology stock index may rise 5-10 times, which deserves investors' attention.

many fund managers have different views on the ai ​​industry chain. some fund managers believe that the market has sufficient expectations for some ai industry chains and expect these sectors to begin to differentiate in the future. at this stage, they are relatively more optimistic about investment opportunities in application segments.