Goldman Sachs: Cuts BYD ELECTRONIC (00285) target price to 53.08 Hong Kong dollars, maintains "buy" rating.

Goldman Sachs issued a research report stating that they will extend the baseline year of BYD ELECTRONIC (00285) to 2026 (originally 2025), and continue to use short-term PE ratio calculations to determine the target price. The target PE ratio has been updated to 17.1 times (previously 19.5 times), still based on the company's forward PE ratio being one standard deviation higher than the historical average, reflecting Goldman Sachs' positive view on the company's product portfolio upgrade. Therefore, Goldman Sachs has lowered the 12-month target price by 3.5% to HK$53.08 (previously HK$54.98) while maintaining a "buy" rating. Goldman Sachs expects that the revenue of BYD ELECTRONIC in the second half of 2025 will increase by 35% on a half-year basis, driven mainly by seasonal improvements, the trend of smart driving driving the company to enhance value through product expansion, and growth support brought by the company's expansion of the metal frame business in the new smart phone product cycle. However, softness in the smart phone market and intense competition in the automobile market continue to suppress the company's growth. BYD ELECTRONIC plans to expand from the smart phone and automobile markets to the AI data center field, covering liquid cooling, power supply, light modules, etc., with long-term prospects to diversify the terminal market layout, but requiring higher R&D investment in the short term. Considering the softness in the terminal market, Goldman Sachs may have previously predicted too optimistically, so they have revised down the net profit forecasts for 2025 to 2027 by 11%, 24%, and 26%. Despite the forecast revisions, Goldman Sachs still expects revenue to achieve sequential growth and gross profit margin expansion, driving the compound annual growth rate of net profit from 2025 to 2027 to 26% (previously 38%).