The Zhitong Finance App learned that Anxin International released a research report stating that it maintains the “buy” rating of BYD Electronics (00285), with a target price of HK$46.5. The company achieved year-on-year growth in the three major business segments of consumer electronics, new smart products, and new energy vehicles in 2023. The total revenue scale reached a record high, the business structure was further optimized, and profits increased dramatically. Furthermore, the major customer business in North America is progressing smoothly, and the performance is expected to continue to grow along with the recovery of the consumer electronics industry and the continued development of the new energy vehicle business; in addition, the bank believes that the positive financial benefits brought by the acquisition of Jeep's A customer-related business will help the company grow.

Anxin International's main views are as follows:

The scale of revenue reached a record high, and profitability improved significantly

In 2023, BYD Electronics recorded a 21.2% year-on-year increase in revenue to 129.96 billion yuan for the whole year, a record high. Thanks to the continuous increase in the share of major overseas customers and the recovery in demand from Android customers, the revenue of the consumer electronics business sector increased 18.5% year on year to 97.42 billion yuan. Among them, component revenue decreased 3.7% year on year to 13.64 billion yuan, and assembly revenue increased 23.1% year on year to 83.78 billion yuan.

The company's new smart product business revenue increased 21.3% year-on-year to 18.441 billion yuan. The household energy storage business achieved growth, and businesses such as drones, smart homes, and gaming hardware maintained steady development. Thanks to the optimization of the product structure and the improvement of overall operating efficiency, the company's gross margin increased 5.92 pct to 8.0% year on year, and profit attributable to shareholders increased 117.6% year over year to 4.04 billion yuan. The company has accelerated the layout of a new circuit with potential for growth, further optimized its business structure, and continued to improve its capacity utilization rate to achieve an increase in market share and a significant increase in profits.

The NEV business grew strongly, surpassing 10 billion for the first time

Benefiting from the international development of new energy vehicles and the acceleration of intelligence, the company's shipments of various products such as smart cockpits, intelligent driving, intelligent suspensions, and thermal management continued to increase. Vehicle shipments grew rapidly and categories continued to expand, driving the business segment's revenue to a sharp rise of 52.2% year-on-year to 14.10 billion yuan. The performance was impressive, breaking through 10 billion dollars for the first time. The company will further improve and broaden the business product line layout and steadily advance the development of new products.

Complete high-quality asset acquisitions, new momentum for business growth

At the end of 2023, the company successfully acquired JP Circuits' production business in Chengdu and Wuxi for 14.29 billion yuan. The acquisition strengthened the company's leading position in the smartphone parts industry, created synergies in multiple dimensions of technology, team, production and operation, and deepened partnerships with major customers. It is expected that the addition of JP will further open up the product line of BYD Electronics for major North American customers, and is expected to increase profit margins and support the company's long-term development and maintaining its leading position in the industry.

Continuous R&D investment, AI product line layout

In 2023, the company's R&D expenditure increased 18.9% year-on-year to 4.72 billion yuan. By the end of 2023, the company had applied for more than 10,000 patents and hundreds of automotive product patents. The company has established a good strategic partnership with Nvidia, a leading global AI company, and continues to increase R&D investment and product layout in new energy vehicle products, AI servers, etc., and has now formed a product matrix covering AI servers, edge AI computing, AIPC, and robots, bringing new growth momentum to the company's business development.