20230717-招银国际-比亚迪电子-00285.HK-Clear_path_to_margin_recovery__Upgrade_to_BUY_7页_1mb

Company: BYDE (285 HK) upgraded from Hold to Buy by CMB International Global Markets.

Rationale: Faster-than-expected net profit margin improvement from 2.7% in 2023E to 3.1% in FY25E, driven by stabilized Android and Apple business segments, gains from new intelligent and NEV products, and higher operating efficiency. Earnings beat in 1H23 with net profit growth of 115-146% YoY, exceeding revised estimates.

Financial Highlights:

• REVISITED EPS projections for FY23-25E increased by 11-13% due to strong 1H23 performance and margin recovery.
• Target price set at HK$31.67, implying 24.9% upside from current HK$25.35.
• Current P/E ratio: 14.4x for FY23E; target P/E 17.9x for FY23E, reflecting improved profitability and growth in emerging segments.

Valuation Update:

• Stock trades at 14.4x/11.7x FY23/24E P/E, attractive vs. 78%/23% EPS growth expectations.
• Catalysts include Apple share gain, margin improvements, and growth from automotive and residential energy storage sectors.

Recommendation: BUY for potential 15%+ return in 12 months, based on diversified business outlook and margin recovery ahead of targets.