Jinwu Financial News | BYD Electronics (International) Co., Ltd.
BYD ELECTRONIC (INTERNATIONAL) COMPANY LIMITED

Stock code: 00285
P/E ratio: 20x
Projected price-earnings ratio: 18x
Earnings per share: $0.82
Market capitalization: $80 billion
Business category: Consumer electronics
Group Chairman: Wang Chuanfu
Major shareholders: BYD Co., Ltd. (1211) (65.8%)

5-year performance
Year: 2019/2020/2021/2022/2023
Revenue (100 million yuan): 530/730/890/1070/1300
Gross profit (100 million yuan): 39.6/96.3/60.2/63.5/104
Profit (100 million yuan): 16.0/54.4/23.1/18.6/40.4
Earnings per share (HKD): 0.79/ 2.88/ 1.26/ 0.93/ 1.96
Dividend per share (HK$): 0.08/0.29/0.13/0.19/0.59
Gross profit margin: 7.5/13.2/6.8/5.9/8.0
ROE: 9.7/27.7/10.0/7.5/14.7


--Company profile--

The main business of BYD Electronics is the manufacture of mobile phone parts and modules. It also provides customers with mobile phone design and assembly services. It is a vertically integrated mobile phone parts and module manufacturing, mobile phone design and assembly service provider. The company provides services to well-known mobile phone suppliers (that is, original equipment manufacturers or OEMs), and has continued to develop other electronic fields in recent years.

In the mobile phone business, product services include providing mobile phone parts (including mobile phone cases and structural parts) to mobile phone manufacturers, manufacturing mobile phone modules equipped with mechanical parts such as mobile phone cases, microphones, connectors, and other components, as well as design and assembly services for mobile phones, and providing design, component production and assembly services for other electronic products. Provide one-stop, vertical service.

In recent years, we have continued to use our own technology to develop more businesses other than mobile phones. Currently, our business includes the development of new materials, product design and development, and component and component manufacturing. The products cover the four major fields of smartphones and laptops, new smart products, intelligent automotive systems, and healthcare.

[Figure 1] -- Strengthening the development of various intelligent businesses in recent years

--Enterprise development--

The main place of business of BYD Electronics is located in China. In the past, the main business was mobile phone OEM manufacturing. In the early years, it was affected by the decline of its main customer Nokia, which caused BYD Electronics' performance to decline continuously. Since then, it has been driven by orders for smartphones and Chinese mobile phones, which has led to significant business growth.

After many years of growth, smartphones have entered a steady cycle in recent years. Currently, smartphone shipments are about 1.3 billion units a year, and the growth is not high.

In recent years, BYD Electronics has used its own technology to continuously develop new business categories, such as the application of new material technology in electronic products. Shipments of glass and ceramic-related electronic products have increased dramatically, while the metal parts category has developed steadily and is in a leading position in global technology and market share.

--Earning ability analysis--

BYD Electronics' business has continued to grow, but profits have fluctuated quite a bit. In the past, due to a sharp increase in profits due to healthcare related businesses, profits fluctuated greatly due to factors such as global chip supply, but when investors analyze it, the most important thing is the long-term situation of the company.

Based on this company's past performance analysis, BYD Electronics' gross margin is medium, but it has not reached a very high level. It is difficult for companies that have always operated this type of OEM model to have great profitability, but it's not that bad. At all times, BYD Electronics only handled certain intermediate components and processes, and many customers were large enterprise customers, making profits not the highest.

Various factors suggest that this company's ability to make money is not the strongest category. However, this company has certain technology, which makes the company quality. The overall quality of the enterprise is considered medium to high, and in terms of corporate valuation, it will not be given too high a level.

This company has an advantage in terms of technology. At the same time, the company has also strengthened relationships with domestic manufacturers, cooperated with it to launch different smartphones, and obtained many high-end projects in recent years. Chinese mobile phone brands are still developing in the long term, which has also enabled this stock to benefit from it.

--Development highlights--

The global mobile phone market has grown moderately in recent years, but the growth rate of this company's business volume is better than that of the industry. In recent years, it has had ideal growth, and profits are also ideal. This shows that BYD Electronics has certain advantages, has obtained considerable orders in industry competition, and has experienced greater growth than the industry.

For example, a few years ago, BYD Electronics developed plastic-metal nano mixing technology (plastic-metal hybrid, PMH for short), and actually applied it to chassis and components, and the business continued to rise.

[Figure 2] --Plastic-metal hybrid related materials

Until recently, BYD will not develop new material technologies such as 3D glass, ceramics, and composites. Due to high market demand, thanks to related technology, the company's business has grown dramatically.

This technology can improve the level of signal reception and further support 5G technology in wireless charging. At the same time, when it comes to wireless charging, unlike traditional materials that cause phones to overheat, the related technology has already enabled BYD Electronics to obtain orders from many smartphone manufacturers. I believe it will be more widely used and will continue to drive business upward in the future. At the same time, this technology can be applied to more categories of products.

One of BYD Electronics' strengths is R&D capabilities. Management emphasizes the importance of technology, and this company invests a lot of capital in R&D every year.

At the same time, the company has quite a few engineers, and the cost of these engineers is lower than that of foreign countries, which is an enterprise advantage. As long as it has R&D capabilities and R&D costs are lower than foreign companies, it can have an advantage in the future and become one of the key points of growth.

--Long-term positivity--

[Figure 3] --Technology applications in different industries

This company is in a leading position in the world in many technologies, such as new material technology, and the biggest development position is the extended application of technology.

In recent years, BYD Electronics has continued to develop new businesses, using its own technology and resources, and this move has indeed achieved results. In recent years, the company has shown some growth in terms of both business and profit, which reflects the correct direction. At the same time, in terms of the company's R&D and application of technology, this enterprise is indeed not easy.

The scale of the business has continued to expand in recent years. In particular, shipments of glass and ceramic products have grown strongly. Some new smart product segments have successfully acquired new customers, and the automotive intelligent systems business is developing positively. I believe the growth will continue.

The company's current business already covers diverse market segments such as smartphones, tablets, new energy vehicles, smart homes, drones, the Internet of Things, and robots. Since the parent company BYD (1211)'s business mainly focuses on new energy vehicles, some of BYD Electronics' (0285) business will be related to new energy vehicles, and when 1211 grows ideally, it will drive 0285.

The company is in a leading position in the world in some fields, with ideal annual cash flow. At the same time, it invests a large amount of money in research and development every year to maintain business development and leading technology, so long-term development is positive.

BYD Electronics continues to use its own technology and advantages to develop extended businesses. At the same time, these businesses developed in recent years have achieved good results, reflecting that the company has some advantages, so that it can develop all extended businesses without bad results. It also brings out this company, and its future development will not be bad.

--Investment Strategy--

Overall, the evaluation of this company is positive. Although the gross profit from the business is not very high, the company has technology and R&D capabilities. Past development has proven to be successful in many fields and is positive in the long run. However, keep in mind that the short term will still be affected by factors such as the global economy and industry, so investors should take the long-term direction.

The company is of quality, and there are no problems with long-term development. However, the stock price fluctuates quite a bit. Currently, the price-earnings ratio is 20 times, and the projected price-earnings ratio is 18 times. Currently, the stock price is within a reasonable range.

If you have it in stock before, you don't need to sell it. If you have no stock and want to invest, you should first ask about your risk tolerance, because the stock price is quite volatile. If you think it's right for you, you can use the dividend model. It is not recommended to buy in large quantities at once, but you need to control the total investment amount, and hold it for a long time after investing.

(I am a licensed person in the securities industry and do not own the above shares. (The above article is only an analysis of the company and does not constitute an investment offer. Investors should spend time researching the company before investing to decide whether it is suitable for them.)

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