BYDE reported 1H24 revenue growth of 40% YoY, largely in-line with estimates, driven by Apple share gains, Android recovery, Jabil consolidation and strong NEV segment. Net profit growth of 0.1% YoY is below our/consensus estimate by 21%/15% YoY, mainly dragged by weaker GPM (-1ppt YoY) and higher selling expenses (+211% YoY). Mgmt. will host an analyst briefing at 9:30am HKT today (29 Aug), and we will look for details on 1) Apple's business outlook (iPad/iPhone), 2) GPM and selling expenses guidance, 3) NEV product pipeline, and 4) AI server business updates.

1H24 strong revenue offset by lower GPM and higher selling expenses.

BYDE's strong 1H24 revenue growth of 40% YoY is largely in-line with estimates, given strong Apple/Android OEM/components, Jabil consolidation and strong NEV demand. By segment, assembly/component/new intelligent/automobile sales posted +36%/+206%/-16%/+26% YoY growth. 1H24 GPM declined 1ppt to 6.8% and selling expenses surged 211% YoY to RMB902mn, resulting in net profit growth of 0.1% YoY, 21%/15% below our/consensus estimates. For 2Q24, revenue grew 41% YoY and net profit declined 14% YoY.

2H24 outlook: iPhone/iPad momentum, Jabil improving profitability, NEV product launches and lower interest costs. Looking into 2H24, we

expect iPhone/iPad upgrade cycle, resilient Android demand, Jabil synergy, automotive pipeline and AI server contribution will drive robust revenue growth in 2H24E. In addition, we expect GPM will recover HoH into 2H24E, and interest expenses will decline to RMB154mn in 2H24E from RMB309mn in 1H24, as BYDE will switch from USD loans to RMB loans gradually in 2024.

Expect details on revenue/margin guidance in analyst meeting;

Maintain BUY. Overall, we maintain our positive view on BYDE's business outlook in FY24/25E, despite near-term drag by expenses. During the analyst meeting today, we will look for more details on 1) iPad/iPhone business outlook and share gains, 2) guidance on GPM and selling expenses in 2H24E, 3) NEV new product launches, and 4) AI server business updates (ODM/components). Maintain BUY. Near-term catalysts include iPhone/iPad shipment and NEV/AI server products.