Lately, there’s been a market shift. Money is moving from downstream players like gold retailers and distributors to the upstream miners, who capture the richest profits in a gold boom.
The same thing is happening in the AI world.
In 2025, fund managers first chased large language models (LLM) developers and flashy AI applications.
But now, capital is flowing upstream – powering AI infrastructure like data centres, reserve power batteries, and engineering firms.
There’s where Karrie International (SEHK: 1050) enters the picture.
Over the last few weeks, this 45-year old Hong Kong manufacturer suddenly became one of the hottest names, with its share price surged over 178%, from about HK$0.90 to HK$2.50 per share.
The catalyst? Karrie recently joined Nvidia’s approved vendor list for server chassis and rack components.
So, the burning question: Is this surge just a hype-driven rally, or the beginning of realizing the company’s true value?
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What is Karrie International?
Founded in 1980, Karrie International is a long-time industrial manufacturer. The company refocused its business after spinning off its real estate business in March 2023.
Currently, it operates through two main business segments:
1. The Metal and Plastic Business is the star performer.
This segment manufactures server chassis, racks, and related components for major technology companies.
Over 85% of this division’s revenue comes from server products, making it heavily exposed to data centre demand.
The company serves Fortune 500 clients and has built a reputation for quality manufacturing and automation.
2. The Electronic Manufacturing Services Business.
This handles magnetic tape storage, POS systems, and computer peripherals. It’s a smaller but stable segment.
As one of the manufacturers with production facilities in Guangdong, Karrie benefitted from the one-off gains of the re-development of land where the former production facilities were located.
In 2023, the company spun off its real estate arm, KRP Development Holdings (2421.HK), to focus on its industrial manufacturing business.
This move allowed shareholders to unlock value by splitting its two different business models.
Strong financial performance – despite market’s up and down
Under the radar, Karrie has been delivering healthy results – a story of a resilient manufacturer riding the AI wave.
For its fiscal year 2025 ended March 2025, the company achieved revenue of HK$3.2 billion. This was up 11% from the previous year. More importantly, net profit jumped 21% to HK$204.5 million.
The company’s revenue has shown cyclical patterns over the past five years.
After peaking at HK$3.5 billion in 2021, revenues dipped during the industry downturn but recovered strongly in 2025 with a 2.2% CAGR from 2020 to 2025.
Even during industry slowdowns, Karrie consistently booked at least HK$200 million in net profit – a hallmark of operational discipline.
What’s more, it maintains healthy margins despite operating in a competitive manufacturing sector.
The company’s return on equity (ROE) averaged 25.8% over the past three years, though this includes an exceptional 41.2% in 2023.
Meanwhile, the normalized ROE of around 18-19% remains attractive for an industrial company.
Before becoming a popular AI-themed stock, Karrie was a staple for traditional funds. It was favoured for its stable dividend returns.
Over the past five years, the company maintained a dividend payout ratio between 30% and 40%. In the last financial year, the payout ratio rose to over 64%.
Manufacturing stocks usually trade at a low 5-8x PE ratio. On the other hand, Karrie has often offered dividend yields above 6% to 7%.
This strong dividend record is why fund managers have consistently chosen Karrie for steady income.
But here’s where things get exciting.
Thailand Expansion and the Nvidia Connection
Karrie’s development strategy centres on two key drivers: expanding its Thailand operations and capitalizing on AI server demand.
In January 2025, the company’s subsidiary KarTech Thai acquired land in Thailand to build a new production facility.
This HK$890 million investment aims to manufacture server chassis and related products.
The Thailand plant has already secured certifications from multiple customers and begun delivering products. It is expected to operate at full capacity within a year of completion.
Now, the server industry is still dominated by US and European companies. Karrie’s expansion in Thailand helps reduce the risk of losing major customers due to ongoing US-China trade tensions.
More importantly, having production facilities in two locations makes Karrie more appealing to global clients. These clients are also concerned about trade conflicts.
Maybe that’s why Nvidia chose to deepen its collaboration with Karrie.
In September 2025, Karrie was officially listed as an approved and recommended vendor list for server chassis and rack components.
No firm contracts are signed yet… But Karrie is already selling prototypes to support Nvidia’s AI server platforms and data center projects.
Karrie International now as an AI infrastructure play
This is backed by the company’s proven manufacturing base, consistent dividend payments, and growing footprint in the server chassis market.
However, the stock has already gained over 178% in just over a month – pricing in much of the positive Nvidia news.
At current levels ~HK$2.50, the stock trades at a premium that expects its growth to continue.
My final thoughts
Think about this: Nvidia is the world’s largest chip maker. More AI use means higher demand for data centers, which means more demand for Nvidia’s chips.
If even a tiny fraction of just 0.5% of Nvidia’s output goes to Karrie, the financial impact on Karrie could be huge. This relationship could be a game-changer.
The big problem is whether Karrie can handle the order volume when it comes.
Having said that, I expect uncertainty to remain despite Karrie’s collaboration with Nvidia. This timeline can happen quickly. This timeline may take up to years too
The company’s inclusion in Nvidia’s vendor list validates its technical capabilities. However, the more crucial point is to observe its upcoming financial results.
