Goldman Sachs: Reduced target price of BYD Electronics (00285) to HK$53.08 to maintain “buy” rating

The Zhitong Finance App learned that Goldman Sachs released a research report stating that it will extend the base year of BYD Electronics (00285) to 2026 (originally 2025) and continue to use short-term price-earnings ratios to estimate target prices. The target price-earnings ratio was updated to 17.1 times (previously 19.5 times). This is still based on the company's projected price-earnings ratio being one standard deviation higher than the historical average, reflecting Goldman Sachs's positive view on upgrading its product portfolio. As a result, Goldman Sachs lowered its 12-month target price by 3.5% to HK$53.08 (previously HK$54.98). Maintain a “buy” rating.

Goldman Sachs expects BYD Electronics' revenue to increase by 35% in the second half of 2025. The main drivers include seasonal improvements, smart driving trends driving the company to increase value through product expansion, and growth support brought by the company's expansion of the metal frame business in the new smartphone product cycle. However, the weak smartphone market and fierce competition in the automotive market continue to suppress the company's growth.

BYD Electronics plans to expand from the smartphone and automobile markets to AI data centers, covering liquid cooling, power supplies, optical modules, etc. It is expected to diversify the terminal market layout in the long term, but it will need to invest in higher R&D requirements in the short term. Considering the weakness in the terminal market, Goldman Sachs's previous forecast may have been too positive, so the 2025-2027 net profit forecast was lowered by 11%, 24%, and 26%. Despite the lowered forecast, Goldman Sachs expects revenue to grow month-on-month and expand gross margin, driving a compound annual net profit growth rate of 26% (previously 38%) from 2025 to 2027.