BYDE’s share price declined 8% yesterday (28 Apr) due to flattish 1Q25 earnings dragged by weaker high-end smartphone demand and potential tariff impact on Apple assembly business. 1Q25 GPM recovered 0.4ppts QoQ to 6.3% but down 0.6ppts YoY. 1Q25 earnings reached 10%/11% of our/consensus FY25E estimates, largely in-line with 14%/11% in 1Q24/1Q23. Looking ahead, mgmt. maintained positive guidance for 2025: 1) Apple assembly growth and better profitability of component, 2) stable Android biz, 3) strong automotive demand and 4) server/robots ramp-up in FY25-26E. As for tariff, mgmt. expected limited impact (15% US sales exposure) given overseas production capacity (Vietnam, India, Malaysia) and new tariff to be paid by clients. We trim FY25/26E EPS forecasts by 5-8% to reflect 1Q25 results. Our new SOTP-based TP of HK$43.22 implies 16.2x FY25E P/E. Upcoming catalysts include auto product expansion, AI server ramp-up and GPM improvement.
1Q25 flattish earnings dragged by high-end smartphone demand. BYDE reported 1Q25 revenue/NP growth of 1%/2% YoY, driven by slight assembly growth and automotive double sales, partly offset by weaker smartphone components and new intelligent products softness. GPM improved 0.4ppts QoQ to 6.3% but dropped 0.6ppts YoY due to weaker revenue mix on lower Apple/Android high-end smartphone demand. Overall, 1Q25 net profit increased 1.9% YoY thanks to better operating efficiency and lower interest expense.
2Q/2025 Outlook: improving casing profitability, robust auto biz and server/robotics ramp-up. During earnings call, mgmt. guided positive 2Q25/ 2025 outlook: 1) Consumer electronics: 2Q25 QoQ growth and flattish YoY with improving profitability in Chengdu plant; 2) Automotive: rapid growth driven by Parentco orders and new products ramp-up (suspension/ADAS); 3) Server: liquid cooling products (UQD, cold plate, manifold) passed Nvidia qualifications and overseas client expansion; revenue guidance of RMB 3-5bn maintained; 4) Robotics: extensive adoption of robotic arms in assembly lines in 2H25E; 5) Profitability: stable GPM across all segments and improving cost control on operating efficiency and lower interest expenses.
Limited impact from the US tariff; maintain BUY. Mgmt. expected limited impact from the US tariff (15% US sales exposure) given: 1) Android: 100% domestic sales; 2) Apple: 30% of assembly sales export to the US but new tariff to be paid by customers; 3) Auto: 100% domestic sales; 4) Intelligent products: 90% domestics sales; 5) Global production capacity (15% of sales): Vietnam, India and Malaysia. Maintain BUY with new SOTP-based TP of HK$43.22 (16.2x FY25E P/E).