Core Viewpoint - The report from CICC maintains the net profit forecast for Denso (01316) for 2025 and 2026, with the current stock price corresponding to 12.6x and 9.9x P/E for 25E and 26E respectively, and raises the target price by 17% to HKD 8.4, indicating a 21% upside potential from the current price [1] Group 1: Financial Performance - In 1H25, the company reported revenue of USD 2.242 billion, a year-on-year increase of 6.8%, and a net profit attributable to shareholders of USD 63.48 million, which represents a threefold increase year-on-year, with a net profit margin of 2.8%, the highest since 2023 [1] - The gross margin in 1H25 was 11.5%, up by 1.5 percentage points year-on-year and 0.6 percentage points quarter-on-quarter, driven by revenue growth and improved operational efficiency [2] - The effective tax rate for 1H25 was 28%, a decrease of 15.6% year-on-year and 4 percentage points quarter-on-quarter [2] Group 2: Regional and Business Performance - Revenue growth outpaced the light vehicle sales growth across various regions, with significant projects launched, including models from Xiaomi, North American EV leaders, XPeng, and BYD [1] - Revenue by region in 1H25 was USD 1.14 billion for North America, USD 690 million for Asia-Pacific, and USD 400 million for EMEASA, with year-on-year growth rates of +1.7%, +15.5%, and +9.4% respectively [1] - Revenue from different business segments in 1H25 was USD 1.53 billion for EPS, USD 230 million for CIS, USD 90 million for HPS, and USD 400 million for DL, with year-on-year growth rates of +8.6%, +2.9%, +1.7%, and +3.8% respectively [1] Group 3: Order Acquisition and Profitability Measures - In 1H25, the company secured new orders worth USD 1.5 billion, including domestic and overseas business from Chinese automakers and orders for dual small gear EPS and rear-wheel steering from European automakers, maintaining an annual order target of USD 5 billion [3] - The company has received project designations for L4 autonomous driving models from global EV leaders and line control projects from leading Chinese new energy OEMs, indicating a potential lead in mass production speed for line control models [3] - The introduction of the new Motion IQ software suite aims to enhance customer efficiency and reduce costs, while the company collaborates with suppliers and customers to manage tariff changes and optimize production capacity [3]
中金：维持耐世特(01316)跑赢行业评级 升目标价至8.4港元