20221130-招银国际-比亚迪电子-00285.HK-Corp_Day_Takeaways__4Q_recovery_to_continue_New_growth_drivers_to_accelerate_in_2023_6页_1mb

BYDE (285 HK) Summary

Core Content and Outlook

BYDE, a Hong Kong-listed company, is expected to continue its recovery in the fourth quarter (4Q) of 2022, with revenue growth driven by strong demand from Apple's products, the automobile sector, and new smart products. The company's gross margin (GPM) is projected to improve quarter-over-quarter due to a better product mix and improved utilization, including the conversion of Android manufacturing capacity into auto business.

For 2023, despite a muted outlook for the Android business, major growth drivers are anticipated from:

1. Apple share gain in OEM/components (iPad, iPhone, Apple Watch).
2. Expansion into the automobile segment, with NEV (New Energy Vehicle) ramp-up expected to boost growth.
3. Residential energy storage, which saw accelerated growth in the first half of 2022 and is expected to improve household (HoH) performance in the second half.

The company is projected to maintain a positive outlook for FY23-24E, with revenue and profit growth anticipated. The current stock price trades at a P/E ratio of 16.3x for FY23E, which the analyst deems fair compared to the 5-year historical average of 15.5x forward P/E. The recommendation remains HOLD with a target price (TP) of HK$20.39.

Key Financial Highlights

Business Segments and Growth Drivers

• Assembly (EMS business): Expected to grow steadily, with a 10x P/E multiple assigned. It accounts for 9% of FY23E profit.
• Components (metal/glass/plastic): Expected to grow at a moderate pace, with a 10x P/E assigned. It contributes 20% to FY23E profit.
• Masks: Declining in importance, with a 8x P/E assigned due to near-term growth potential. It accounts for 0.2% of FY23E profit.
• New intelligent (smart products): Significant growth expected, with a 15x P/E assigned. It contributes 71% to FY23E profit.
• Auto intelligent (NEV segment): Expected to be a key driver, with mass production of products like ADAS, auto parking, and thermal management systems anticipated in 2023. It contributes 71% to FY23E profit.

Valuation and Target Price

• Target Price (TP): HK$20.39 (based on SOTP valuation).
• Weighted-average target P/E multiple: 13.6x FY23E EPS.
• P/E band: The 12-month forward P/E range is shown in Figure 5.
• P/B band: The 12-month forward P/B range is shown in Figure 6.

Analyst Ratings and Peer Comparison

Shareholding and Performance

• Mkt Cap: HK$55,316.2 million
• Avg 3 mths t/o: HK$21.7 million
• 52w High/Low: HK$31.85 / HK$13.60
• Total Issued Shares: 2,253.2 million

Share Performance (12 months):

• Absolute: 53.2%
• Relative: 77.8%

Financial Summary

Key Risks and Considerations

• The current valuation of 16.3x FY23E P/E is considered fair given recent industry headwinds.
• The analyst recommends maintaining the HOLD rating due to the company's diverse business segments and varying growth profiles.
• While the company is well-positioned for growth in the NEV and smart product segments, the Android business may face challenges.
• The e-cigarette segment is expected to have limited impact from China policy due to the company's focus on overseas markets.

Disclosures

• The analyst certifies that the views expressed are personal and not influenced by compensation.
• There are no conflicts of interest, and CMBIGM is not liable for any losses arising from reliance on the report.
• The report is intended solely for major US institutional investors and should not be distributed to others in the U.S.
• The report is for the use of intended recipients only and may not be reproduced or published without prior written consent.