[ET Net News Agency, 22 October 2019] Morgan Stanley upped its target price for BYD
Electronic (00285) to HK$9.5 from HK$8 and maintained its "underweight" rating.
The research house believes metal casing revenue will decline as smartphone OEMs choose
other materials such as glass and intense competition makes BYDE's metal casing gross
margin (GM) hard to recover.
Morgan estimated BYDE's metal casing revenue will decline 8% in 2H, despite the
company's share gain in the metal casing market. Smartphone OEMs are turning to plastic
and glass back casings for smartphones. GM is therefore improving slightly from the high
teens in 1H, but still below 20% in 2H - it estimated utilization rate is not full for CNC
(computer numerical control) machines. As such, Morgan estimated 3Q net profit of Rm350mn,
with a sequential recovery in 4Q. (KL)