<News Alert> Positive profit alert: 3Q23 earnings surged by 119%-165% y-o-y, ahead of market expectations
- Issued a profit alert expecting 3Q23 earnings to jump by 119%-165% y-o-y, ahead of market expectations
- Earnings beat is attributable to penetration into iPhone value chain, demand recovery from Android customers and robust EV components business
- Expect these drivers to continue to propel earnings supported by smartphone business recovery in 2H23 and FY24. Maintain BUY with TP under review.
3Q23 earnings beat. BYD Electronics issued a profit alert yesterday after market close. The company expects 3Q23 profit to climb by c.119%-165% y-o-y to Rmb1.32bn to Rmb1.60bn vs.market expectations of Rmb2.0bn for 2H23. The robust performance is attributed to its deeper integration into the Apple value chain, resurgence in the Android phone market, and the consistently strong growth in automotive electronics as well as its IoT business.
Expect short-term share price support. The strong 3Q23 earnings reaffirms our view that (1) the company has outperformed the industry riding on its exposure to Apple, and (2) the smartphone market is gradually recovering. We currently forecast 80% and 45% earnings growth for FY23 and FY24 respectively. We expect consensus projections to be revised upwards post the official results announcement. The stock trades at 13.2x FY24 PE (before earnings revision), vs. its historical average of 17x. Maintain BUY with TP under review.