We maintain TP at HK$30.69 and the investment rating as "Buy". Since BYD Electronic (the "Company") can expand its revenue resources continuously through business boundary expansion, especially vehicle electronics, we believe that the Company's business scale and profitability will keep achieving rapid expansion; we maintain TP at HK$30.69 and the investment rating as "Buy".
The Company's 1HFY23 preliminary earnings were better than market expectations. In a positive profit alert, the Company expects its 1HFY23 shareholders' profit to surge by approximately 115%-146% yoy. Its revenue grew strongly in 1HFY23, mainly due to the significant increase of share in the supply chain of major customers in North America, continuous growth in emerging businesses such as new energy vehicles and new intelligent products, as well as aggressive expansion in the energy storage market in all regions (through both private label and white label approaches). Given the strong growth in revenue, with the improvement of capacity utilization and the optimization of business structure by increasing the revenue share of high-margin products such as new energy vehicles and energy storage, its shareholders' profit achieved an explosive growth in 1HFY23.
We expect the development of the Company's new energy vehicles business to exceed market
expectations, and the value per vehicle is expected to increase significantly. Relying on its strong precision
manufacturing capability, rapid mass production capability, as well as ability in materials and precision molds, the
Company continues to expand its new energy vehicle product portfolio. The Company's layout in new energy vehicles covers smart cockpit, intelligent driving, chassis and suspension, thermal management system, etc. We can see that the Company aims to be an all-round tier-1 manufacturer. After the continuous mass production of new products, we believe that the Company will gradually obtain the position of first supplier of BYD Auto in several fields. With the improvement in loading rate of new products and rising market share, the value per vehicle is expected to increase significantly. At present, BYD accounts for the vast majority share of the Company's new energy vehicle business revenue; due to product experience and market validation in BYD Auto, we believe that the Company will extend the successful products proven in BYD Auto to other OEMs in the future, further expanding the breadth of the Company's new energy vehicle business.
Catalysts: Mass production of more new energy vehicle products; strong demand for new energy vehicle products and energy storage products; recovery of production capacity utilization.
Risk warning: Penetration rate into the business of its major customer in North America may be less than expected; product line expansion may be slower than expected; market competition may intensify.