Bank of America Securities: Lowers BYD ELECTRONIC target price to HKD 40, reiterates "Neutral" rating

Bank of America Securities released a research report stating that BYD Electronic's third-quarter performance was below expectations, with a net profit of 1.4 billion yuan (the same below), a quarterly increase of 27%, and a year-on-year decrease of 9%, only reaching 29% and 27% of the bank's and market's annual estimates, respectively, and lower than the 32-38% level of the same period in the past three years. The quarterly gross profit margin decreased by 0.5 percentage points quarter-on-quarter and fell by 1.6 percentage points year-on-year to 6.9%. Bank of America Securities lowered its earnings forecast for BYD Electronic for 2025 to 2027 by 4 to 8% to reflect the slowdown in growth and lackluster outlook in the third quarter. The target price was reduced from HKD 45.5 to HKD 40, maintaining the 2026 forecast price-to-earnings ratio at 14 times. The stock is currently trading at a 2026 expected price-to-earnings ratio of 13 times, which is still undervalued compared to the average price-to-earnings ratio of 26 times in the Apple supply chain peers. Based on reasonable valuation, the "Neutral" rating is reaffirmed