We hosted BYDE at CMBI Technology Corporate Day on 28 Jun. Mgmt. reiterated their positive outlook in 2024: 1) Apple/Android: iPad share gains, AI iPhone upgrade cycle and high-end Android growth; 2) NEV: smart cockpits, heat-pump system, high-end ADAS system and active suspension products to drive 40%+ sales growth in FY24E; 3) Nvidia AI server/robotics: AI servers for Chinese CSPs and autonomous mobile robots (AMRs) for factories. The stock now trades at 15.2x FY24E P/E, which is attractive in our view. Our TP of HK$45.15 is based on 17.2x FY24E P/E. Reiterate BUY and BYDE is our sector top pick.
Consumer electronics: iPad share gains, iPhone casing and high-endAndroid growth. For Apple's biz, mgmt. remains positive on iPad share gains and iPhone cycle, boosting sales contribution of 50-60% in FY24E. Mgmt. expects AI smartphones to bring long-term growth opportunities on spec upgrade in structural components. In addition, mgmt. believes Jabil synergies will result in earnings upside on efficiency improvement (better automation) and lower finance costs (CNY financing). For non-Apple biz, mgmt. believes Android high-end growth is positive to ODM/casing shipment and guided 10-15% YoY growth for FY24E.
Automotive: 40%+ sales growth in FY24E. Mgmt. shared highlights belowduring our meetings: 1) smart cockpit growth driven by Parentco orders; 2) heat pump system and high-end ADAS system products entered mass production and will contribute sales in 2024; 3) active suspension products will start mass production in 4Q24E. Overall, mgmt. guided automotive business to deliver 40% YoY growth in FY24E thanks to shipment growth and value content increase.
Nvidia's AI server/robotics: Emerging growth drivers in FY24-25E. Mmgt.
stated that AI server ODM products started shipment to Chinese CSP clients in 1H24E, and BYDE is cooperating closely with Nvidia to develop the next-gen AI server products and components for mass production in FY25E. In addition, BYDE has co-developed AMR robots with Nvidia focusing on logistics in factories, and these robots have started trial runs in BYD factories. Mgmt. believes self-developed robotics will reduce labour costs and enhance efficiency. While household energy storage demand is weaker than expected in Europe, mgmt. believes AI server and robotics will be emerging growth drivers in 2024-25E.