敏实集团：Overseas foundation to withstand trade risks

Investment Rating - The report initiates coverage of Minth Group with a BUY rating and a target price of HK$21.00, indicating a potential upside of 70.2$12.34 [2][4][51]. Core Insights - Minth Group is transitioning from a manufacturer of exterior decorative parts to a diversified tier-1 supplier with capabilities in various materials, positioning it well against trade risks due to its solid overseas foundation [2][15][17]. - The company’s overseas operations contributed approximately 10% to its total net profit in FY23, with expectations for overseas net profit to double by FY26E [2][21]. - The battery housing segment is projected to grow significantly, with expected revenue increases of 60% in FY24, 35% in FY25, and 30% in FY26, driven by the global EV market expansion [2][33][36]. Summary by Sections Company Overview - Founded in 1992, Minth Group has evolved into a diversified tier-1 supplier with multi-material manufacturing capabilities, generating 51% of its revenue from China, 24% from North America, and 20% from Europe in FY23 [15][16]. - The battery housing business, initiated in 2019, accounted for 17% of total revenue in FY23, with significant growth potential in related chassis structural parts [15][23]. Investment Thesis - Minth's extensive overseas experience provides a competitive edge in navigating trade risks, with profitable operations in Mexico and Serbia [17][18]. - The company is well-positioned to supply Chinese OEMs for local production in Europe, helping them bypass tariffs imposed on EVs produced in China [19][21]. Financial Analysis - Revenue is projected to grow by 19% in FY24, 15% in FY25, and 13% in FY26, with net profit expected to increase by 18%, 14%, and 13% respectively during the same period [41][46]. - The gross margin is anticipated to be around 27.2% in FY24, slightly declining due to the rising contribution from the battery housing segment [42][49]. Valuation - The target price of HK$21.00 is based on a 10x FY24E P/E, reflecting a historical average and the current low valuation of the stock [51][52].