Citi released a research report stating that maintaining the “buy” rating of BYD Electronics (00285), the earnings forecast per share for this year and next two years was lowered by 2% and 4%, and the target price was lowered from HK$48 to HK$47 in response to a decline in sales expectations.
According to the report, the company's consumer electronics business revenue increased 19% year-on-year last year, contributing about 75% of total revenue. The acquisition of mobile electronics manufacturing business Juno Newco from Jabil Inc. was completed within the year. Management expects to help enhance the ability to introduce new products, and expand more core products in the future.
The company anticipates that the contribution of automotive and artificial intelligence (AI) server-related businesses will increase. At the same time, driven by AI smartphones, the high-end smartphone market in China will grow by about 20% to 30%, driving the company to expect a sharp increase in the parts business this year, while the assembly business will remain relatively stable.
The bank expects investors to focus mainly on business prospects and strategic plans after completion of the acquisition, opportunities under the AI smartphone specification upgrade, automotive electronics business and gross margin prospects, and the potential of the AI server business. It is predicted that this year's growth will be mainly driven by high-end smart phone cases and automotive businesses.