• BYD Electronics and CATL are two leading Chinese companies in the electric vehicle (EV) and battery industries. CGS International recently initiated coverage of the stocks, highlighting their rapid growth and global ambitions. • BYD Electronics is expanding its role in Apple’s supply chain and benefiting from parent (65% stake) BYD’s push for intelligent driving in EVs.  • BYD Electronics is also tapping into new markets like AI data centers, with strong profit and revenue growth forecasted for the next few years. The profit growth forecasted by CGS is amazing at 26% CAGR in FY25-27F. • Meanwhile, CATL, the world’s largest EV battery maker, is accelerating its global expansion, especially in Europe, by investing heavily in new manufacturing capacity and maintaining its dominance in battery shipments. • Read more below... |
Excerpts from CGS International report
Analysts: Ray Kwok & Summer Huang ■ We expect BYDE to transition from an assembler to a premium high precision component supplier in the Apple supply chain, driving a 13% revenue CAGR.
■ We expect BYDE to deliver a 26% net profit CAGR in FY25-27F driven by increasing orders from Apple, BYD, and NVIDIA. ■ Initiate coverage with an Add rating. Our TP of HK$46.80 is based on 16x FY26F P/E; the stock currently trades at an attractive 12x FY25F P/E. |
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Hypergrowth driven by deeper integration with Apple and BYD
We anticipate BYDE delivering a robust 26% net profit CAGR in 2025-27F, driven by its three business segments:
| 1) consumer electronics: expanding market share from assembly to high-precision components for Apple; 2) new energy vehicle (NEV) products: significantly increasing intelligent driving components for BYD’s cars; and 3) new intelligent products: commence manufacturing liquid-cooling components for NVIDIA’s data centres. |
Moving up the value chain to high-precision components for Apple
We expect BYDE to see a significant increase in high-margin orders from Apple in FY25- 27F as it successfully expands from an assembler (iPad assembly and iPhone glass backcover manufacturer) to a high-value, high-precision components manufacturer, including for iPhone's metal middle frames, following the acquisition of Jabil.
We believe BYDE’s advanced production capabilities can enhance the operational efficiency of Apple’s products, while BYDE’s overseas capacities can help align the company with Apple’s supply chain diversification plans while also mitigating any potential tariff risks.
We estimate that BYDE’s revenue from Apple will see a 13% CAGR over FY25-27F.
Benefits from BYD’s increased intelligent driving adoption
We expect BYDE to benefit from its key supplier status to BYD amid greater intelligent driving penetration.
We project BYD’s rollout of its upgraded ADAS platforms across its entire lineup raising the dollar content and margin profiles of intelligent driving components.
We forecast its auto business segment delivering a 32% revenue CAGR in FY25-27F.
| High growth potential of the AI data centre solutions business New intelligent products, particularly AI data centre solutions, represent a high-growth frontier driven by partnerships with NVIDIA for liquid-cooling server components and robust AI server assembly from domestic hyperscalers, positioning it as a long-term growth pillar. |
