BOEVx hosted an investor call on 9 Jun regarding business update and 3-year strategy roadmap. Mgmt. shared its 2025 guidance for the first time: 1） revenue target of HK$20bn in 2025 （23% FY22-25E CAGR）， 2） global market share to reach 25% in 2025 （vs ~20% in 2022）， 3） Overseas sales mix of 50% by 2025 （vs 30% in FY23E）， and 4） new technology （OLED/mini/LTOP） sales mix to target 50% in 2025. In near term, despite margin pressure on automobile price cut and Chengdu capacity ramp- up in 1Q23, mgmt. expects strong new orders and Chengdu UTR ramp-up （100% in 3Q23E） will drive margin recovery in 2H23E. In longer term, overseas share gain and high-end product launches will continue to drive ASP/ NPM expansion. After recent correction, the stock trades at 11.7x/9.1x FY23/24E, which is attractive in our view. Maintain BUY with TP HK$23.69 （25x FY23E P/E）。
　　Strong client orders and Cheungdu plant ramp-up to boost share gain; ASP/margin pressure to ease in 2H23E. Despite auto OEM’s intensified competition in 1Q23, mgmt. expects industry competition to alleviate in 2H23E and remain positive on share gain on strong orders from leading auto OEM/NEV clients. Mgmt. also expected ASP/GPM pressure to ease in 2H23E thanks to semi shortage easing, cost-down on material localization, established pricing adjustment strategy and resource support from parentco. In addition, mgmt. guided Chengdu plant’s UTR to reach 100% in 3Q23E after mass production in 1Q23, thanks to parentco’s order migration, recent plant qualification and new order wins.
　　2025 roadmap: Overseas expansion and OLED/Mini/LTOP products as growth drivers. Mgmt. outlined a clear business roadmap and shared its 2025 guidance for the first time: 1） HK$20bn revenue target in 2025 （23% CAGR in FY22-25E）； 2） overseas sales mix to reach 50% in 2025; 3） global market share of 25% in 2025 （e.g. 50% share in BYD/Changan/Geely now）。 In terms of growth drivers, BOEVx expected that 1） display system will ramp up on overseas expansion （e.g. US tier-1 client win in 1Q23） and 2） high- end LTOP/OLED products will penetrate into Chinese and overseas clients.
　　Reiterate BUY with TP of HK$23.69. We believe 1Q23 margin pressure has been priced in given 36% correction in past three months, and order wins and Chengdu plant ramp-up will boost margin recovery in 2H23E. In long term, we think BOEVx will benefit from auto display upgrade and overseas expansion given auto intelligence and smart cockpit trend. Trading at 11.7x/9.1x FY23/24E, we think the stock is attractive （vs 21%/29% EPS growth）。 Reiterate BUY.