BOCI has released a research report stating that the trough in BYD Electronic's consumer electronics business alongside the ramp-up of AI infrastructure marks a favorable entry point, reiterating a "Buy" rating with a target price of HK$33.7, based on 15 times the 2027 earnings per share.
The company's third-quarter 2026 results fell short of expectations due to weakness in smartphones, with revenue growing 6% year-on-year, while gross profit and net profit declined 31% and 61% year-on-year respectively. Although the consumer electronics segment will continue to face pressure in 2026 and 2027, the bank believes that a shift toward greater titanium content in phone designs by a major US customer in 2027 will effectively offset the downturn cycle. In addition, the continued ramp-up of AI infrastructure and the increase in content value per vehicle for automotive intelligent systems (AIS) in 2027 are expected to drive the group's gross margin. With the current price-to-earnings and price-to-book ratios approaching historical averages at levels more than two standard deviations below, and the company's precision manufacturing capabilities shifting toward AI infrastructure, the bank views the current level as an attractive entry point.
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