Joyson Electronic (.SS)_ 3Q24 Earnings Missed; Auto Safety New Order Bookings Slowed Down

Summary of Joyson Electronic (600699.SS) 3Q24 Earnings Call Company Overview - Company: Joyson Electronic - Ticker: 600699.SS - Industry: Automotive components manufacturing - Headquarters: Ningbo, China - Global Presence: Over 100 bases in 30 countries with more than 80,000 employees [14][15] Key Financial Results - 3Q24 Revenue: Rmb14,056 million, down 2% YoY but up 2% QoQ [1][10] - Net Profit: Rmb305 million, up 1% YoY but down 8% QoQ [1][10] - EBIT Margin: Expanded by 1.3 percentage points YoY to 3.6% [2][10] - Gross Margin: Increased by 0.8 percentage points YoY to 15.7% [10] Segment Performance - Auto Electronics: Revenue grew 3% YoY and 10% QoQ to Rmb4,566 million; gross margin narrowed to 18.9% [2][10] - Auto Safety Products: Revenue decreased 3% YoY but increased 2% QoQ to Rmb9,635 million; gross margin expanded to 14.1% [2][10] Order Book Insights - Total New Orders: Rmb20.0 billion in 3Q24, up 19% YoY but down 3% QoQ [3] - Auto Safety Products Orders: Rmb9.3 billion, down 31% YoY and 42% QoQ [3] - Auto Electronics Orders: Rmb10.8 billion, up 218% YoY and 130% QoQ [3] Earnings Projections - Revised Earnings Estimates: FY2024/25/26 earnings projections trimmed by 6% [4][11] - Target Price: Adjusted to Rmb18.5 from Rmb15.0, maintaining a Neutral rating [4][7][16] Market Position and Strategy - Investment Strategy: Positive outlook due to solid orders and revenue growth in auto electronics; however, the positives are largely priced in [15] - Valuation: Target price reflects a 15x 2025E P/E, indicating a recovery story amid a weak auto industry [16] Risks and Opportunities - Downside Risks: Include lower-than-expected global production growth, rising raw material prices, and poor sales growth in key markets [17] - Upside Risks: Better-than-expected auto demand, improved efficiencies, and faster adoption of autonomous vehicles [18] Financial Metrics Overview - Market Cap: Rmb23,680 million (approximately US$3,326 million) [7] - Expected Share Price Return: 10.1% with a dividend yield of 2.5% [7] - Core EPS Growth: Projected growth of 23.2% in 2024E, 30.4% in 2025E, and 20.6% in 2026E [11] Conclusion - Joyson Electronic's 3Q24 results reflect a mixed performance with challenges in the auto safety segment but growth in auto electronics. The company is navigating a tough market environment while maintaining a focus on strategic growth areas. The revised earnings projections and target price suggest cautious optimism moving forward.