Open Securities: Maintaining a "Buy" rating for BYD ELECTRONIC (00285) Full year performance may remain stable Tracking potential incremental realization.

Open Source Securities released a research report stating that due to the increase in the proportion of assembly business and the delay in AI progress, the net profit forecast for BYD ELECTRONIC (00285) for 2025-2027 has been lowered from 46/59/80 billion to 43/53/67 billion yuan, with a year-on-year growth of 0%/23%/28%. The current stock price corresponds to a PE ratio of 17.3/14.2/11.0 for 2025-2027. The valuation already reflects pessimistic expectations for the performance in the current year. Potential growth factors in 2026-2027 include new products for major customers, server components, progress in Siasun Robot & Automation, and automotive electronics, but performance realization needs to be continuously monitored. The report maintains a "buy" rating. The report states that in Q3 of 2025, the company's revenue was 42.68 billion yuan, a decrease of 2% year-on-year, with a decline in new intelligent product business offsetting the growth in consumer electronics. The delay in shipments of new machines for major customers and material changes also had a negative impact. Net profit in Q2 of 2025 was 1.41 billion yuan, a year-on-year decrease of -9%, slightly below the bank's expectations, with a gross margin in Q3 of 2025 decreasing by 1.6 percentage points to 6.9% year-on-year. Looking ahead to Q4 of 2025, the company expects revenue and gross margin to remain stable year-on-year, corresponding to a steady year-on-year performance. The company's performance growth in 2026-2027 will benefit from various factors: (1) Consumer electronics: from Q4 of 2025 onwards, increased investment in mid-frame capacity, major customers' foldable and 20th anniversary models are expected to contribute significantly to growth, with the addition of major customers' home product assembly business. (2) Automotive business: intelligent driving and suspension products are the main contributors to growth, likely to benefit from the simultaneous increase in mother company sales volume and ASP, and starting from 2025, there will be increased promotion efforts for external automotive customers. (3) New intelligent products: in 2026, data centers are expected to realize orders, and non-data center businesses are expected to grow; the GB300 liquid cooling system has been certified, and from 2027 onwards, the Rubin model will fully adopt liquid cooling, with various manufacturers increasing CapEx, driving further volume growth of liquid cooling products; power supplies are ready, with expectations of benefiting from the increasing proportion of high-voltage architectures in 2027; and optical module products are steadily advancing.