We hosted an investor call with BYDE mgmt. yesterday. Overall, mgmt. reiterated positive view on synergies from Jabil's mobility acquisition, which will accelerate BYDE's share gain in Apple supply chain. In addition, mgmt. expects high-end Andriod recovery, share gain in iPad OEM/components and rapid growth in household energy storage and NEV biz in 2H23E. Better product mix and rising UTR will also drive margin improvement. We maintain our positive stance on the stock following strong 1H23 results and promising growth outlook.
The stock trades at 21.9x/17.8x FY23/24E P/E, which is attractive. Reiterate BUY.
2H23E outlook: High-end Android recovery and US client's share gain.
Despite demand weakness in smartphone/PC markets in 1H23, BYDE's consumer electronics business delivered solid growth of 24% YoY, well above industry average, mainly driven by share gain in iPad OEM/ components and resilient growth in high-end Android. Mgmt. expects Android recovery and rising UTR will boost segment margin in 2H23E. In addition, high-end model from major Android client and favourable product mix will drive overall profitability.
Strong household energy storage with double-digit GPM. Backed by an extensive new intelligent product portfolio, mgmt. expected strong growth in 2H23E driven by solid demand of household energy storage in Germany and stable growth for smart home products. In addition, mgmt. guided GPM to improve HoH on better product mix.
NEV momentum on shipment ramp-up and product expansion. Mgmt. stated that auto segment (+89% YoY) is mainly driven by smart cockpit and autonomous driving. Mgmt. expects strong orders from parentco and new product expansion (e.g. mid-computing driving, integrated parking, thermal management, enter-level cockpit ADAS and active suspension system) will drive strong revenue growth into 2H23E/2024.
Positive on synergies from acquisition of Jabil's Mobility biz. Looking ahead, we expect the acquisition of Jabil's mobility business will create synergies with BYDE's component product portfolio and drive further share gain in iPhone supply chain. We are positive on significant sales synergies given Jabil's high exposure to Apple's component business.
Maintain BUY with TP to HK$41.98. We reiterate BUY for BYDE's positive outlook on Android recovery, Apple share gain and NEV/new intelligent upside. The stock now trades at 21.9x/17.8x FY23/24E, which is attractive in our view. Our TP of HK$41.98 is based on 18.4x FY24E P/E.