Investment Rating - The report maintains a "Buy" rating for BYD Electronics with a target price of HKD 43.7, indicating a potential upside of 17% from the current price of HKD 37.4 [1][3]. Core Insights - Despite a decline in revenue and profit in Q3, BYD Electronics is expected to see seasonal growth in Q4. The company is projected to maintain strong growth momentum in its consumer electronics, automotive, and server segments through 2026 [8]. - The report adjusts the 2025 profit forecast but largely maintains the 2026 profit outlook, reflecting confidence in the company's growth drivers [8]. Financial Performance and Forecast - Revenue for 2023 is projected at RMB 129,957 million, with a year-on-year growth rate of 21%. By 2026, revenue is expected to reach RMB 196,524 million, growing at a rate of 10% [2]. - The net profit for 2023 is estimated at RMB 4,041 million, with a significant increase of 29% expected in 2026, reaching RMB 5,618 million [2]. - The gross margin is forecasted to improve from 6.6% in 2025 to 7.3% in 2026, indicating a positive trend in profitability [2]. Business Segments and Growth Drivers - Key growth drivers include new models from major clients, expansion of CNC production capacity, and strong demand for liquid cooling and power components in AI servers [8]. - The automotive segment is expected to see both volume growth and an increase in the value per vehicle due to advancements in smart driving and suspension products [8]. Valuation - The report employs a sum-of-the-parts valuation method, assigning target P/E ratios to various business segments, resulting in a target price of HKD 43.7, corresponding to a P/E of 20.7x for 2025 [12].

Core Points - Changan Automobile has completed the third payment of 3.45 billion yuan to Huawei, fulfilling the prerequisites of the equity transfer agreement, totaling 11.5 billion yuan for a 10% stake in the company Yiwang [1][6] - The partnership between Avita and Huawei is seen as a strategic upgrade, aiming to leverage each other's strengths for high-quality and rapid development [6] - Avita plans to launch 17 products by 2030 in collaboration with Huawei, with five upgraded models expected to be released by 2026 [6] Investment Progress - The first payment of 2.3 billion yuan was completed on October 16, 2024, with the transfer of technology, assets, and personnel proceeding as per the agreement [3] - The second payment of 5.75 billion yuan was completed, with the transaction's closing date set for February 28, 2025 [3] - The total investment of 11.5 billion yuan by Avita in Yiwang is a fulfillment of a previous commitment made by Changan Automobile [6] Company Structure and Future Plans - Yiwang, established in January 2024, is seen as a key player in carrying forward Huawei's automotive business capabilities, with Avita's investment enhancing its growth potential [6] - Yiwang's ownership structure includes Huawei (80%), Avita (10%), and Seres (10%), indicating a collaborative approach to developing smart automotive solutions [6][7] - Huawei has expressed intentions to introduce strategic partners to Yiwang, aiming to position it as an open platform for automotive industry intelligence [7]