CGSI Research
May 28, 2025
BYD Electronic: Apple & BYD to Drive Multi-Year Hypergrowth
Investment Summary: BYD Electronic (BYDE) Positioned for Hypergrowth
BYD Electronic (BYDE) is expected to transition into a premium high-precision component supplier within Apple’s supply chain and benefit from increased orders for intelligent driving components for BYD’s electric vehicles (EVs). The company is projected to deliver a 26% net profit Compound Annual Growth Rate (CAGR) in Fiscal Year 2025-2027, spurred by rising orders from Apple, BYD, and NVIDIA. Coverage is initiated with an Add rating, featuring a target price of HK\$46.80, based on a 16x Fiscal Year 2026 Price-to-Earnings (P/E) ratio. The stock is currently trading at an attractive 12x Fiscal Year 2025 P/E [[1]].
- Consumer Electronics: Expansion from assembly to high-precision components for Apple.
- New Energy Vehicle (NEV) Products: Significant increase in intelligent driving components for BYD’s cars.
- New Intelligent Products: Commencing manufacturing of liquid-cooling components for NVIDIA’s data centers.
Consumer Electronics: Transitioning to High-Precision Components for Apple
BYDE is expected to experience a substantial increase in high-margin orders from Apple in Fiscal Year 2025-2027. This growth is attributed to its successful expansion from an assembler of iPads and iPhone glass back covers to a manufacturer of high-value, high-precision components, including metal middle frames for iPhones following the acquisition of Jabil. BYDE’s advanced production capabilities are poised to enhance the operational efficiency of Apple’s products. Its overseas capacities align with Apple’s supply chain diversification plans, mitigating potential tariff risks. Revenue from Apple is estimated to see a 13% CAGR over Fiscal Year 2025-2027 [[1]].
NEV Products: Benefits from Increased Intelligent Driving Adoption by BYD
BYDE is expected to benefit from its key supplier status to BYD, driven by greater intelligent driving penetration. The rollout of upgraded Advanced Driver Assistance Systems (ADAS) platforms across BYD’s entire lineup is projected to raise the dollar content and margin profiles of intelligent driving components. The auto business segment is forecasted to deliver a 32% revenue CAGR in Fiscal Year 2025-2027 [[1]].
AI Data Center Solutions: High-Growth Potential
New intelligent products, particularly AI data center solutions, represent a high-growth frontier. Partnerships with NVIDIA for liquid-cooling server components and robust AI server assembly from domestic hyperscalers position BYDE as a long-term growth pillar [[1]].
Initiation of Coverage with Add Rating and Target Price
Coverage on BYDE is initiated with an Add rating and a target price of HK\$46.80, based on a 16x Fiscal Year 2026 P/E ratio, on par with large-cap Apple supplier peers, reflecting its accelerated earnings growth. Net profit is expected to grow by 28%/29%/25% in Fiscal Year 2025/2026/2027, driven by consistent market share gains in Apple’s supply chain and auto components demand from BYD. Potential catalysts include accelerating orders for high-precision components from Apple, rapid intelligent driving adoption for BYD’s EVs, and easing US tariff risks. Downside risks include weak demand from Apple and slow ADAS penetration by BYD, which could hurt profit growth [[1]].
Company Financials and Key Metrics
Key financial forecasts and metrics include [[1]]:
- Revenue (RMBm): 201,904 (FY25F), 226,370 (FY26F), 254,053 (FY27F)
- Net Profit (RMBm): 5,447 (FY25F), 7,009 (FY26F), 8,723 (FY27F)
- Normalised EPS Growth: 28% (FY25F), 29% (FY26F), 24% (FY27F)
- FD Normalised P/E (x): 12.30 (FY25F), 9.56 (FY26F), 7.68 (FY27F)
Consensus ratings show a strong buy consensus with 31 Buys, 2 Holds, and 0 Sells [[1]].
Consumer Electronics: Deeper Integration into Apple’s Supply Chain
BYDE is poised to benefit from continuous market share gains in Apple’s supply chain and rising demand for high-end components from Android customers. The consumer electronics segment is expected to maintain stable core business growth [[7]].
Continuous Market Share Gains in Apple’s Supply Chain
BYDE has successfully penetrated Apple’s supply chain, evolving from iPad assembly and iPhone glass back-cover manufacturing to supplying components for iPhones, Mac, and HomePod. The acquisition of Jabil’s mobile electronics business enhances BYDE’s capabilities, enabling the production of metal middle frames for iPhones. BYDE’s expertise in precision manufacturing and its ability to meet Apple’s stringent quality standards position it favorably. Furthermore, BYDE’s overseas production capacities align with Apple’s supply chain diversification strategy, mitigating potential tariff risks. These factors contribute to a projected 14% revenue CAGR from Apple between 2025 and 2027 [[7]].
Android Customer Benefits: Rising High-End Component Demand
The rising demand for premium Android components, driven by foldable smartphones and GenAI-enabled devices, also supports sustained revenue growth momentum [[5]].
NEV Products: Benefit from BYD’s Accelerating Intelligent Driving Adoption
BYD Electronic’s NEV portfolio is primed as smart driving adoption accelerates. The company is set to benefit from BYD’s aggressive electrification strategy and its key supplier status, boosting demand for critical components like intelligent cockpits, thermal management systems, and domain controllers [[5]].
BYD Democratizing Intelligent Driving: Full Lineup Rollout by 2025-2026F
BYD plans to integrate ADAS across its entire vehicle lineup, including low-to-mid-priced models. This strategy increases the technological appeal of its EVs and strengthens its competitive edge [[13]].
New Intelligent Products: Booming AI Data Center Demand in 2025-27F
BYDE commenced mass production of AI servers in 2024, marking a strategic expansion into high-performance computing infrastructure. The company is well-positioned to address surging demand for energy-efficient AI data center solutions in China and overseas [[16]].
Comprehensive Product Portfolio Covering Full-Scenario Solutions
BYD Electronic has developed a range of products and full-scenario solutions for data centers, spanning servers, networking, software, cooling (liquid to liquid and liquid to air), and power solutions [[16]].
Client Base Expansion: Domestic & Overseas Momentum
BYD Electronic began mass productions of AI servers to leading domestic cloud service providers (CSPs) in 2024, including Tencent Cloud and Alibaba Cloud. It is also targeting high-margin NVIDIA partnerships [[17]].
SWOT Analysis
Key strengths, weaknesses, opportunities, and threats [[19]]:
- Strengths: Vertically integrated manufacturing, BYD Group support.
- Weaknesses: High revenue reliance on Apple.
- Opportunities: Expanding role in Apple’s ecosystem, rising EV shipments by BYD.
- Threats: Escalating U.S.-China trade tensions.
Risks
- Customer Concentration: Heavy reliance on Apple and BYD.
- Geopolitical and Trade Policy Risk: US-China trade tensions.
- Margin Pressure from Intensifying Competition: Aggressive pricing.
- Execution Risks in New Business Line: Commercialization of AI data center business.
Financials: Forecast FY25F/26F/27F EPS Growth
BYD Electronic’s revenue grew by 36% year-over-year to RMB 177.3 billion in FY24. Net profit grew by 6% year-over-year to RMB 4.3 billion. A strong 28% net profit jump is anticipated in FY25F [[21]].
Valuation & Recommendation
BYD Electronic currently trades at 12x FY25F P/E, the lower end of its historical 3-year average [[24]]. Initiate coverage with an Add rating, target price of HK\$46.80.
Company Background
BYD Electronic (International) Corporation Ltd was founded in 1995. It is now a constituent of the Hang Seng Internet & Information Technology Index, with businesses spanning smartphones, wearables, computers, automotive intelligence systems, Internet of Things (IoT), smart home appliances, gaming hardware, robots, communication equipment, and medical products [[27]].
