BYD-E reported disappointing 1Q25 results with mere flat YoY revenue and NI growth, primarily impacted by softening high-end smartphone demand from both key US client and Android OEMs. Mgmt. keeps 2025 guidance unchanged upon tariff headwinds as it sees a manageable tariff impact on its business, while most of its ongoing projects are progressing as planned. Direct tariff affects around 11% of revenue but near-term supply chain relocation is difficult so BYD-E remains the go- to partner by most clients. We believe the primary sector risk stems from potential global consumer electronics demand deterioration amid ongoing trade tensions if reaching a deal takes too long. But as BYD-E’s share price had corrected by 48% from its peak, we believe the stock is rather attractive at only 12.4x 2025E EPS. Maintain BUY with new target price of HK$40.9 (previously HK$53.2) based on 16x 2025E EPS.
Key Factors for Rating
1Q25 results miss: revenue reached RMB37bn (+1% YoY), while GP declined 7% YoY, primarily due to reduced component revenue upon demand weakness of both key US client and domestic Android. Segment GPMs were stable. NI of RMB0.6bn (+2% YoY) achieved only 28% and 33% of 1H25 BOCIe and consensus, respectively.
2025 outlook: despite 1Q25 weakness, mgmt. expects sequential improvement from 2Q25 as its new projects across different segments ramp up while tariff war has limited impact on Company. Company keeps 2025 guidance unchanged.
Tariff war impact: mgmt. emphasises 1) BYDE’s limited tariff war exposure with approximately RMB20bn (~11%) revenue from US market across assembly and NIP; 2) the tariff war so far does not dramatically change BYDE’s operations, client engagement and future global production base roadmap.
Assembly & Component: 1Q25 saw YoY revenue decline in both assembly and component, resulting from weakened demand from US and high-end Android clients. Per mgmt., key US client keeps normal shipment momentum, with assembly revenue growth expected from new product introductions including glass cover in 2025. Jabil integration remains key margin driver through automation and efficiency improvement.
AIS remains the most solid and on-track segment of BYDE: revenue almost doubled YoY in 1Q25, driven by both volume and content value per Mgmt. Mgmt. maintains RMB30bn revenue target for 2025, with growth primarily driven by BYD EV shipment growth and new product introduction such as ADAS and smart suspension. We keep our AIS revenue forecasts of 42%/23%/19% YoY over 2025/26/27E.