2025 preview: near-term earnings dragged by pricing pressure and new plant profitability

2025preview:near-term earnings dragged bypricing pressure andnew plant profitability Target PriceHK$8.40(Previous TPHK$8.84)Up/Downside79.8%Current PriceHK$4.67 BOEVxwill report2H25/FY25E results inmid-March, and we estimate FY25Erevenue/net profit ofHK$14,533mn/378mn(+8%/-3% YoY),implying 2H25Erevenue/net profit ofHK$7,863mn/198mn(+8%/-10% YoY),with profitmainlydragged by domestic destocking pressure,yields in new Vietnam/Chengduplants,andsystembusinessprofitability.Looking into 2026, we are positive onBOEVx’s earnings recovery, backed by overseasshare gains, Vietnamcapacityramp, marginimprovement fromtheChengdu plant and system business.Werevise down FY25-27EEPS by 5-7% to reflect near-term domestic headwindsand pricing pressure, and lower our TP toHK$8.4 based onthesame 14xFY26E P/E.Maintain BUY. China Technology Alex NG(852) 3900 0881alexng@cmbi.com.hk Hanqing LIlihanqing@cmbi.com.hk 2H25/FY25E preview: earnings dragged by domestic demand, ASPheadwinds and depreciation pressure.We estimate FY25Erevenuetogrow 8%toHK$14,533mnandnet profittodecline 3% YoY toHK$385mn,9.7%below Bloomberg consensus estimates.For 2H25E,we expectrevenue/net profitofHK$7,863mn/205mn(+8%/-10% YoY), mainlydue todomesticdemand weakness,slower yield improvement in newVietnam/Chengduplants,and profitability in system segment.We estimate2H25E NPMto remain flattish at2.5%,compared to2.7% in 1H25. 2026 outlook: overseassales growthand Vietnam/Chengdu capacityramp-up.For 2026,we are constructiveonearnings recovery: 1) overseassales:continued share gains with 20%+ YoY sales growth, backed byVietnam capacity ramp-up; 2)Chengdu plant: margin improvementgivenhigher UTR and better yield;3)system business:order wins of high-marginLTPS/OLEDprojects and improving operating efficiency.We estimaterevenue/net profit to grow 10%/25% YoY in FY26E. Valuation/Key risks.We lower FY25-27E EPS estimates by5-7% to factorin2H25 earningspressure,higherdepreciation costsand slower systembusinessmargin improvement. We trim our TP to HK$8.4based onthesame14.0xFY26E P/E. Weremain positive onBOEVx’s industry leadershipin auto display market, share gainswith overseas OEMs, and strong supportfrom its parent company BOE for R&D technology and order/client wins.Trading at7.8x/6.3xFY26/27E P/E, the stock offers attractive risk/reward.Risks includedomestic demand weakness and continued ASP/marginpressure. Source: FactSet 2025results preview Earnings Revision Valuation Maintain BUY and ournew TP of HK$8.40isbased onthesame14.0x FY26E P/E.Wearepositive on BOEVx’s industry leadership in auto display market, share gainswith overseasOEMs, and strong support fromits parent company BOE for R&D technology andorder/client wins.Trading at7.8x/6.3xFY26/27E P/E, the stock offers attractive risk/rewardin our view. Source: Company data, CMBIGM estimates Source: Company data, CMBIGMestimates Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifies thatwith respect tothe securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to the date of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3) serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies coveredin this report. CMBIGM RatingsBUY : Stock with potentialreturn of over 15% over next 12 monthsHOLD: Stock with potential return of +15% to-10% over next 12 monthsSELL: Stock with potential loss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broad market benchmark over next 12 months:Industryexpected to underperform the relevant broad market benchmark over next 12 months CMB InternationalGlobal MarketsLimited Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800CMB InternationalGlobalMarketsLimited (“CMBIGM”) is a wholly owned subsidiary of CMB International Capital Corporation Limited (a wholly ownedsubsidiary of China Merchants Bank) Important DisclosuresThere are risks involved in transacting in any securities. The information contained in this r