Key Takeaways:
Guosheng Securities initiated coverage on Converge Technology at buy with a HK$31 target price, citing the company's position as a core AI optical interconnect supplier.
"Converge Technology is an AI optical interconnect core supplier with its server business becoming the top revenue source," the Guosheng Securities analyst team said in a July 9 report.
The brokerage forecasts net profit of HK$1.4 billion for fiscal 2026, rising to HK$1.7 billion in 2027 and HK$2.2 billion in 2028. It applied a 40x price-to-earnings multiple on 2027 estimated earnings to derive the HK$31 target. Converge's data center MPO fiber products are deeply integrated with overseas cloud providers, while the company also operates in automotive wiring, medical devices and other sectors.
The initiation adds a bullish voice on Converge as AI infrastructure spending drives demand for optical interconnect components. Investors will watch for the company's next earnings report to assess whether server revenue growth and margin trends align with Guosheng's forecasts.
Converge Technology trades on the Hong Kong Stock Exchange under ticker 01729. The company has expanded through acquisitions alongside organic growth in its core optical interconnect business. Its diversified portfolio spans data center connectivity, automotive wiring harnesses and medical equipment components, reducing reliance on any single end market.
The buy rating signals that Guosheng sees Converge as a direct beneficiary of the AI infrastructure buildout. The company's next earnings release will test whether its server segment can sustain the growth trajectory that underpins the HK$31 target.
This article is for informational purposes only and does not constitute investment advice.
