Joyson Electronics Navigates Challenges, Remains Poised for Growth
UOB Kay Hian, 31 March 2025
4Q24 Earnings Miss on Revenue, but Margins Beat Expectations
Joyson Electronics’ (600699 CH) 4Q24 core net profit came in below expectations at Rmb341m (+2.5% yoy/+12.5% qoq). While revenue missed on weaker-than-expected European market demand, the company’s gross margin beat on cost-cutting and efficiency-improving measures. 1
Key Highlights
4Q24 net profit missed on one-off restructuring costs, but adjusted net profit grew 2.5% yoy and 12.5% qoq to Rmb341m. 1
Revenue grew 2.2% yoy and 4.8% qoq to Rmb14,729m in 4Q24, but missed full-year 2024 estimates due to lower sales volume. 1
Gross margin came in above expectations at 18.0% (-0.4ppt yoy/+2.3ppt qoq) in 4Q24 and 16.2% (+1.1ppt yoy) in 2024, driven by improved performance in the auto safety business. 2
Strong cash flow performance, with Rmb4.6b in operating cash flow and Rmb1.3b in free cash flow in 2024. 2
Revenue Growth Drivers
Revenue growth will be driven by new order intakes and the launches of new products. In 2024, the company secured new orders worth approximately Rmb84b over the whole lifecycle. 2
New orders related to EVs exceeded Rmb46b, accounting for over 55% of the total. Domestic orders amounted to Rmb35b, over 40% of the total. 2
Breakthroughs in 800V/1000V+ high-voltage charging systems, partnerships with Qualcomm (autonomous driving) and Black Sesame (L2+/urban NOA solutions), and 5G-based V2X modules will drive future growth. 2
Joyson is also entering the robotics market, leveraging its automotive expertise in AI-driven systems and sensor integration. 2
Margin Expansion through Cost Optimization
We lift our 2025-26 gross margin assumptions from 16.5%/17.1% to 17.2%/18.0% respectively, and introduce our 2027 gross margin assumption of 18.4%. 2
Joyson continues to carry out cost-cutting measures including capacity relocation, employee structure optimization, and supply chain management. 2
The company restructured its European operations by closing facilities and relocating production, which is projected to reduce fixed costs by €40m annually from 2025. 2
Concurrently, supply chain optimization lowered dependency on high-cost European suppliers, enhancing global cost competitiveness. 2
Earnings Revision and Valuation
We cut our 2025-26 net profit forecasts by 19%/21% to Rmb1,649m/Rmb2,044m respectively, and introduce our 2027 net profit forecast of Rmb2,379m. 3
Maintain BUY rating, but cut target price from Rmb30.00 to Rmb24.00, based on 10-year DCF (WACC: 12%/terminal growth: 4%). Our target price implies 20x 2025F PE. 3
