Research Update: Hon Hai Precision Industry Co. Ltd. 'A-' Rating Affirmed On Recovering Performance; Outlook Stable

Taiwan-based Hon Hai Precision Industry Co. Ltd. is the world's largest electronics manufacturing services (EMS) provider, generating EBITDA of New Taiwan dollar (NT$) 186.7 billion in 2019. Hon Hai could see revenue and EBITDA resume growth in 2021 after a COVID-19 induced recession in 2020, given the company's growing higher-margin IIDM services and still-vast advantage in scale, manufacturing technology, and vertical integration. We expect Hon Hai to generate positive discretionary cash flow and sustain a net cash position over the next two years based on our view that Hon Hai's capacity expansion in Vietnam, India, and the U.S. will not materially increase its capital expenditure (capex) needs. On October. 29, 2020, S&P Global Ratings affirmed its 'A-' long-term issuer credit

...- Taiwan-based Hon Hai Precision Industry Co. Ltd. is the world's largest electronics manufacturing services (EMS) provider, generating EBITDA of New Taiwan dollar (NT$) 186.7 billion in 2019. - Hon Hai could see revenue and EBITDA resume growth in 2021 after a COVID-19 induced recession in 2020, given the company's growing higher-margin IIDM services and still-vast advantage in scale, manufacturing technology, and vertical integration. - We expect Hon Hai to generate positive discretionary cash flow and sustain a net cash position over the next two years based on our view that Hon Hai's capacity expansion in Vietnam, India, and the U.S. will not materially increase its capital expenditure (capex) needs. - On October. 29, 2020, S&P Global Ratings affirmed its 'A-' long-term issuer credit rating on Hon Hai, as well as the 'A-' issue rating on Hon Hai's guaranteed medium-term note program. - The stable outlook reflects our expectation that Hon Hai could largely withstand business uncertainty...

Research Update