CICC published a research report maintaining BYD ELECTRONIC's (00285) net profit forecasts of RMB 4.935 billion and RMB 6.184 billion for 2025/2026 respectively. At current share prices, these correspond to 2025/2026 P/E ratios of 18.4x/14.5x. The firm maintains its Outperform rating and, considering the upward shift in industry valuation benchmarks, raised the company's target price by 7.5% to HK$50, representing 2025/2026 P/E ratios of 20.9x/16.4x respectively, with 13.4% upside potential from current levels.
CICC's main viewpoints are as follows:
1H25 Performance Meets Expectations
The company reported 1H25 results with revenue of RMB 80.606 billion, up 2.58% year-over-year, and net profit attributable to shareholders of RMB 1.73 billion, up 13.97% year-over-year. The company's 1H25 performance met expectations. For 2Q25 alone, revenue reached RMB 43.725 billion, up 3.86% year-over-year and 18.56% quarter-over-quarter; net profit attributable to shareholders was RMB 1.108 billion, up 22.07% year-over-year and 78.04% quarter-over-quarter.
Consumer Electronics Business Profitability Improves, NEV Business Revenue Grows Rapidly
In 1H25, company revenue increased 2.58% year-over-year, with consumer electronics/new intelligent products/new energy vehicle business revenues changing by -3.72%/-4.15%/+60.5% year-over-year respectively. The rapid growth in NEV business revenue was primarily driven by continued growth in smart cockpit product shipments and the ramp-up phase of intelligent driving assistance systems and thermal management products. In terms of profitability, the company's gross margin in 1H25 increased 0.54 percentage points year-over-year to 7.36%, primarily due to: 1) improved automation rates in consumer electronics manufacturing business leading to enhanced profitability; 2) cost dilution from rapid growth in automotive electronics revenue.
Company Actively Controls Costs While Continuing R&D Investment for Long-term Growth
In 1H25, the company's selling/administrative/financial expense ratios changed by +0.14ppt/-0.29ppt/-0.17ppt year-over-year respectively, with overall period expense ratios (excluding R&D expenses) showing stable to declining trends, reflecting active cost control efforts. The company's R&D expenses in 1H25 were RMB 2.231 billion, maintaining high levels as the company continues to increase investment in new energy vehicle products and AI servers for long-term positioning.
Optimistic About Company's Accelerated Deployment in AI Data Centers and AI Robotics, Continuously Expanding Capability Boundaries
According to company announcements, the company is actively seizing AI development opportunities through proactive investment in new product development and new customer expansion. In 1H25, AI server shipments grew rapidly, with multiple liquid cooling and power supply products receiving certification from industry leaders. Additionally, the company has begun large-scale deployment of AMR intelligent logistics robots and is actively developing AI robots and core components. In 1H25, the company's intelligent logistics robots have been widely deployed in group manufacturing scenarios, helping improve warehousing and distribution efficiency.
Risk Factors: Low capacity utilization in consumer electronics, slow progress in new consumer electronics projects, automotive electronics performance below expectations.