Goldman Sachs issued a research report stating that it has extended BYD ELECTRONIC's (00285) benchmark year to 2026 (from 2025) and continues to use short-term price-earnings ratio to calculate the target price. The target P/E ratio has been updated to 17.1x (previously 19.5x), which is still based on the company's forward P/E ratio being one standard deviation above the historical average, reflecting Goldman's positive view on its product portfolio upgrade. Consequently, Goldman has reduced its 12-month target price by 3.5% to HK$53.08 (previously HK$54.98) while maintaining its "Buy" rating.

Goldman expects BYD ELECTRONIC's revenue in the second half of 2025 to grow 35% half-year-over-half-year, with key drivers including seasonal improvement, the smart driving trend enabling the company to enhance value through product expansion, and growth support from the company's expansion into metal frame business during new smartphone product cycles. However, weakness in the smartphone market and intense competition in the automotive market continue to suppress the company's growth.

BYD ELECTRONIC plans to expand from smartphone and automotive markets into the AI datacenter sector, covering liquid cooling, power supply, optical modules, and other areas. This diversification of end-market positioning shows long-term promise, but requires higher R&D investment in the short term. Considering the weakness in end markets, Goldman's previous forecasts may have been overly optimistic, leading to downward revisions of net profit forecasts for 2025-2027 by 11%, 24%, and 26% respectively.

Despite the forecast cuts, Goldman still expects revenue to achieve sequential growth with gross margin expansion, driving net profit compound annual growth rate of 26% from 2025 to 2027 (previously 38%).