BOEVx’s revenue climbed 7.9% YoY driven by both conventional and NEV customer expansion and order ramp-up, and strong NEV demand in China/US. However, net profit declined 19% YoY, which is 36%/33% below our/consensus estimates mainly due to EBITDA decline on price adjustment and rising costs on Chengdu plant capacity expansion. The company will host earnings call tomorrow at 10am and we believe market will focus on auto market demand outlook and pricing trend, Chengdu plant profitability and overseas market customer expansion. In 2H23E, we expect strong new orders and Chengdu UTR ramp-up will drive margin recovery. 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 9.6x/7.5x FY23/24E.Maintain BUY and our TP/estimates are under review.
　　1H23 results miss with lower margin offsetting strong China demand.Revenue grew 7.9% YoY, 12%/13% below our/consensus estimates, mainly driven by TFT and touch panel display modules sales in China & US. By segment: 1) auto display (89% sales mix) grew 7% YoY thanks to both conventional and NEV customer expansion, strong demand in NEV from China and order production ramp-up while Europe/Korea/US sales remain flattish; 2) industrial display (11% of total sales) grew 14% YoY driven by higher demand for consumer electronic appliance products. EBITDA declined 10% YoY due to price adjustment and rising costs for capacity expansion at Chengdu plant. 1H23 net profit declined 19% YoY, below our /consensus estimates by 36%/33% mainly due to EBITDA margin decline.
　　Key questions for mgmt. at investor meeting. BOEVx will host earnings　call tomorrow at 10am and the key focus include: 1) auto market competition on ASP pressure and demand outlook in 2H23E; 2) Chengdu plant capacity ramp-up pace and profitability outlook; 3) overseas market expansion pace and order wins; 4) EBITDA/net profit margin outlook; 5) business future roadmap and any change or new guidance for FY24-25E.
　　Our TP/estimates are under review. We believe 1H23 margin pressure has been partially priced in, 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 9.6x/7.5x FY23/24E, we think the stock is still attractive.Reiterate BUY and our TP/estimates are under review.