20220429-招银国际-比亚迪电子-00285.HK-Awaiting_recovery_in_2H22E__Maintain_HOLD_6页_1mb

BYD Electronics (285 HK) Company Update Summary

Core Content

BYD Electronics (285 HK) reported a 77.7% YoY decline in 1Q22 net profit, aligning with earlier profit warnings. The decline was attributed to weak demand and tightened COVID-19 control measures affecting major production bases. The gross margin (GPM) hit a historical low of 5.5% in 1Q22, below expectations of 6.2% seen in 4Q21. Despite this, 1Q22 revenue growth of 5.2% YoY exceeded expectations, driven by OEM/component revenue and the auto/smart segment.

Main Points

• Earnings Performance:

  • 1Q22 net profit fell 77.7% YoY, while revenue grew 5.2% YoY.
  • Management expects 2Q22 revenue and GPM to improve QoQ, with stronger performance in 2H22E due to order recovery.
  • However, the report remains cautious about the impact of ongoing supply chain disruptions and weak smartphone demand, estimating 2Q22E revenue and net profit to decline by 20% and 48% YoY, respectively.

• Earnings Guidance:

  • Management guided FY22E revenue at RMB110–120bn, implying 24–35% YoY growth.
  • The report maintains a conservative revenue estimate of RMB90bn for FY22E, reflecting the uncertainty around demand recovery and supply chain issues.

• Valuation:

  • The report maintains a HOLD rating with a revised target price (TP) of HK$12.4, implying a 12.9x FY22E P/E ratio.
  • Current valuation stands at 15.7x FY22E P/E, which the report deems fair given the earnings uncertainty due to the ongoing effects of the pandemic.

• EPS Forecasts:

  • FY22E–24E EPS are estimated at RMB0.80, RMB1.33, and RMB1.87, respectively.
  • These forecasts are 13–38% below the consensus, highlighting the cautious outlook.

Key Financial Highlights

Revenue Breakdown

Valuation Methodology

The target price is based on a SOTP (Sum of the Parts) valuation, which reflects the diversified business segments of BYDE with different growth profiles and visibility. The weighted average P/E multiple is set at 12.9x FY22E EPS, with specific multiples assigned to each segment:

• Assembly: 10x P/E
• Components: 10x P/E
• Masks: 8x P/E
• Others (smart, auto): 15x P/E

Analyst Ratings

• HOLD: Maintained due to earnings uncertainty and potential for weak demand recovery in 2H22E.
• Target Price: HK$12.4, down 17% from the previous TP of HK$12.45.
• CMBIGM Ratings:
  • BUY: Potential return of over 15% over next 12 months.
  • HOLD: Potential return of +15% to -10% over next 12 months.
  • SELL: Potential loss of over 10% over next 12 months.
  • NOT RATED: Not rated by CMBIGM.

Shareholding & Performance

• Shareholding Structure:

  • Golden Link Worldwide Ltd: 65.76%
  • Gold Dragonfly Ltd: 4.98%
  • Vanguard Group: 1.25%

• Share Performance:

  • 1-month: -10.0%
  • 3-month: -35.0%
  • 6-month: -41.6%
  • 12-month: -24.9% relative to the market

• Stock Data:

  • Market Cap: HK$33,843 million
  • Average 3-month turnover: HK$169.52 million
  • 52-week High/Low: HK$55.00 / HK$13.40
  • Total Issued Shares: 2,253 million

Risk & Disclaimer

• The report contains forward-looking statements and is subject to market risks and uncertainties.
• CMBIGM does not provide individually tailored investment advice.
• Investors are advised to consult with a professional financial advisor before making investment decisions.
• The report is for informational purposes only and should not be construed as an offer or solicitation to buy or sell any security.