Zhaojin Finance News | Zhongyin International released a research report, believing that Chinese auto companies going global is an inevitable trend, and with it comes significantly increased risks of overseas trade and demand for localized supply. Compared to most Chinese auto parts suppliers that are just entering the global market or still incurring losses, Minth Group (00425) has nearly 20 years of overseas experience and thus has a greater advantage.
The bank expects that the unit price of battery boxes will gradually decrease over time, but with the increasing penetration rate of global electric vehicle market and the potential market share expansion of Minth in the field of battery boxes, the bank believes that Minth's battery box business still has huge room for growth. It is expected that Minth's revenue from battery boxes will grow by 60%, 35%, and 30% respectively in 2024-2026, which is higher than the global electric vehicle sales growth rate.
The bank predicts that Minth's revenue will increase by 19%, 15%, and 13% respectively in 2024-2026 to RMB 24.3 billion, 27.9 billion, and 31.6 billion, and net income will increase by 18%, 14%, and 13% respectively to RMB 2.2 billion, 2.6 billion, and 2.9 billion. The bank expects dividends to be resumed in Minth's 2024 annual report as cash flow improves. Currently, Minth's valuation has dropped to a historical low. The bank believes that investors may underestimate Minth's global manufacturing and profitability capabilities in the face of increasing geopolitical risks. We initiated coverage with a buy rating and a target price of HKD 21, based on 10x FY24 EP/E.