Core Viewpoint - BYD Electronic (International) Company Limited is positioned to benefit from the rising demand for Generative Artificial Intelligence (GenAI) smartphones and AI servers, with an attractive valuation based on the Price-to-Earnings Growth (PEG) metric [1][7]. Group 1: GenAI Smartphone Market - The global shipment volume for GenAI smartphones is projected to grow at a CAGR of +78%, increasing from 51 million units in 2023 to 912 million units by 2028, indicating a significant growth opportunity for smartphone component suppliers like BYD Electronic [2]. - BYD Electronic specializes in lightweight casing components for smartphones, which are expected to see increased demand as GenAI smartphones become more prevalent, allowing the company to sell more higher Average Selling Price (ASP) components [3]. Group 2: AI Server Business - The AI server market is anticipated to grow significantly, with TrendForce forecasting a +69% increase in market value to $187 billion in the current year, and Gartner estimating a +30% CAGR for end-user spending on AI servers from 2022 to 2027 [5]. - BYD Electronic's AI server business is expected to generate sales of around RMB1 billion this year, representing approximately 0.6% of the company's projected FY 2024 revenue of RMB170 billion [5]. - The company is collaborating with Nvidia on AI server products, which are set for mass production next year, indicating a strong potential for growth in this segment [5]. Group 3: Financial Metrics and Valuation - BYD Electronic's PEG ratio is currently at an appealing 0.5 times, based on a consensus next twelve months' normalized P/E multiple of 12 times and a projected normalized EPS CAGR of +24% from FY 2023 to FY 2026 [7].
BYD Electronic: Focus On GenAI Smartphone And AI Server Growth Drivers