UOB Kay Hian
Date of Report: Friday, 29 August 2025
Minth Group 1H25 Earnings Disappoint, But Long-Term Growth Remains Intact: In-Depth Analysis & Outlook
Executive Summary
Minth Group Ltd (425 HK), a leading supplier of automotive structural and decorative parts, delivered a mixed set of results for the first half of 2025. While earnings grew, they came in below market expectations due to revenue and margin pressures. Despite these setbacks, UOB Kay Hian maintains a BUY rating on the stock, emphasizing long-term growth opportunities driven by customer expansion and innovative new business lines.
Company Snapshot
- Sector: Automobile
- Share Price: HK\$31.72
- Target Price: HK\$40.00 (+26.1% upside)
- Market Cap: HK\$36,533m (US\$4,714m)
- Shares Issued: 1,152m
- Major Shareholder: Chin Jong Hwa (38.74%)
- 52-week Range: HK\$35.90 – HK\$11.90
- YTD Return: 109.8%
1H25 Financial Highlights
| Metric |
1H25 |
YoY Change |
HoH Change |
2025F |
Comment |
| Revenue (Rmbm) |
12,287 |
+10.8% |
+1.9% |
26,619 |
Weak China JV brands |
| Gross Profit (Rmbm) |
3,473 |
+9.9% |
-1.8% |
7,853 |
US tariffs, RMB appreciation |
| Gross Margin (%) |
28.3 |
-0.2ppt |
-1.1ppt |
29.5 |
Missed due to tariffs/FX |
| EBIT (Rmbm) |
1,738 |
+11.7% |
-1.7% |
4,028 |
Margin pressure |
| Net Profit (Rmbm) |
1,277 |
+19.5% |
+2.0% |
2,930 |
Missed estimates (14%/6%) |
| Operating Cash Flow (Rmbm) |
2,237 |
+29.3% |
+44.9% |
4,757 |
Cash flow outpaced earnings |
Key Financials and Valuation Metrics
| Year Ended Dec 31 |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover (Rmbm) |
20,524 |
23,147 |
26,156 |
29,557 |
33,399 |
| EBITDA (Rmbm) |
4,209 |
4,868 |
5,210 |
5,660 |
6,243 |
| Net Profit (Rmbm) |
1,903 |
2,319 |
2,603 |
2,939 |
3,387 |
| EPS (fen) |
163.8 |
201.6 |
226.0 |
255.2 |
294.1 |
| PE (x) |
17.8 |
14.4 |
12.9 |
11.4 |
9.9 |
| Dividend Yield (%) |
0.0 |
1.4 |
2.3 |
2.6 |
3.0 |
| ROE (%) |
10.3 |
12.0 |
11.7 |
12.4 |
13.0 |
1H25 Results: A Closer Look
- Net profit for 1H25: Rmb1,277m, up 19.5% YoY but 14% below UOBKH and 6% below consensus estimates.
- Adjusted net profit: Rmb1,182m, up 10.4% YoY excluding one-off gains.
- Revenue: Rmb12.29b for 1H25, up 10.8% YoY but only 46% of full-year estimate vs. historical run rate of 48%.
- China market drag: Revenue from China dropped 4.9% YoY to Rmb4.31b, primarily due to JV brands losing share amid electrification trends.
- Gross margin: Fell to 28.3% (down 0.2 pts YoY and 1.1 pts HoH), weighed by higher US tariffs and RMB appreciation vs. the euro.
- SG&A/revenue and R&D/revenue: Improved to 10.7% and 5.9% respectively, both dropping YoY.
- EBIT margin: Up 0.1 pts YoY but down 0.5 pts HoH to 14.1%, below the full-year target.
- Operating cash flow: Rmb2.24b, up 29% YoY and outpacing earnings growth.
Stock Impact: Growth Drivers and Strategic Focus
- Growth catalysts: Expansion of customer base (notably more Chinese OEMs: BYD, Geely, Changan, Chery) and ramp-up of new businesses.
- New business lines: Battery housings, structural chassis parts, intelligent exteriors (smart front modules, doors, tailgates), humanoid robot components, eVTOL (electric vertical take-off and landing), wireless EV charging, and AI liquid cooling.
- Management’s 2025 guidance:
- Double-digit revenue growth
- Earnings growth outpacing revenue
- Rmb15b new order intake for 2025
- Target Rmb30b annual revenue by 2030
Outlook and Earnings Revision
- Revenue growth: 2025-27 estimates trimmed from 15%/20%/20% to 13%/13%/13%, reflecting China JV brand headwinds.
- Gross margin: Cut from 29.5% to 28.9% for the next three years, with management targeting a 2H25 recovery as tariff reimbursements and new plants come online.
- Net profit forecasts: Reduced by 11%/19%/23% for 2025-27, now Rmb2.63b/Rmb2.94b/Rmb3.39b, implying a three-year CAGR of 13%.
- Tariff risk manageable: Only 33.8% of revenue comes from the Americas, of which 70% is locally produced. Less than 4% of total revenue is exposed to US tariff hikes.
Valuation and Recommendation
- BUY rating maintained, target price kept at HK\$40.00. The current valuation (11x 2026F PE) represents a >20% discount to the historical mean (14x), with the target price based on a rolled-over 14x 2026F PE multiple.
- Investment thesis: Despite the near-term earnings miss, Minth is well-positioned for robust medium-to-long-term growth, thanks to its technology-driven product portfolio and successful customer diversification.
Profit & Loss, Balance Sheet & Cash Flow Summary
| Key Metrics |
1H25 |
2025F |
2026F |
2027F |
| Net Turnover (Rmbm) |
23,147 |
26,156 |
29,557 |
33,399 |
| EBITDA (Rmbm) |
4,868 |
5,210 |
5,660 |
6,243 |
| Net Profit (Rmbm) |
2,319 |
2,603 |
2,939 |
3,387 |
| Operating Cash Flow (Rmbm) |
3,274 |
4,539 |
4,098 |
4,449 |
| Capex (Rmbm) |
(1,912) |
(2,130) |
(2,130) |
(2,130) |
| Ending Cash (Rmbm) |
2,441 |
4,075 |
5,015 |
6,248 |
Key Metrics and Ratios
- EBITDA Margin: 21.0% (1H25), narrowing to 18.7% (2027F)
- Net Margin: 10.1% (1H25), stabilizing near 10% by 2027F
- ROE: 12.0% (1H25), rising to 13.0% by 2027F
- Net Debt/Equity: 21.0% (1H25), falling to 1.8% (2027F)
- Interest Cover: 6.4x (1H25), projected at 9.5x (2027F)
Conclusion: Investment Perspective
Minth Group’s first half 2025 performance undershot market expectations due to revenue headwinds in China and margin compression from external shocks. However, the company’s strong operating cash flow, strategic expansion into fast-growing auto technology sectors, and robust order pipeline underpin a positive medium-term outlook. Valuations remain attractive given the growth profile and discount to historical multiples. UOB Kay Hian reiterates its BUY rating with a target price of HK\$40.00, suggesting ample upside as Minth executes on its customer and product diversification strategy.
Disclaimer
This article is based solely on research and analysis originally published by UOB Kay Hian. Please consult your financial adviser before making investment decisions.
