MINTH GROUP(00425.HK)：1H2024 RREULTS WERE IN-LINE BHB REMAINED STRONG DIVERSIFIED NEW BUS BEGIN TO REAP RESULTS MAINTAIN "BUY"-格隆汇

机构：国泰君安国际
研究员：Ivan Wu

　　Maintain "Buy" but lower TP to HK$18.00. Considering 1) the business growth derived from the rapid increase in the sales volume of passenger vehicles in China; 2) the business synergy brought by the further business expansion in overseas markets; 3) the uncertainties of overseas business growth brought by the gradual rise of automobile tariffs; and 4) high shipping costs due to geopolitics, we fine-tuned Minth Group’s ("Minth" or "the Company") 2024-2026F EPS to RMB2.134 (-0.062)/ RMB2.657 (+0.027)/ RMB3.206 (-0.005). We give the Company 7.2x 2024 PER, corresponding to a TP of HK$18.00, and maintain "Buy" rating.
　　The overseas business continued to grow in 1H2024, with GPM increasing yoy and hoh. The Company achieved revenue of RMB11.09 bn in 1H2024, up 13.8% yoy. Overseas business revenue‘s share of total revenue reached 59.2%, up 2.4 ppts yoy. Net profit attributable to shareholders of the Company recorded RMB1.07 bn, up 20.4% yoy. The Company's GPM recovered to 28.5% in 1H2024, up 2.2 ppts yoy /0.1 ppts hoh. As the overseas battery housing business (BHB) continues to increase in sales volume and the scale effect gradually forms, the GPM of the overseas BHB is expected to further grow. We forecast that the Company's GPM will return to 30% in the coming years.
　　The BHB continued to grow rapidly, and BHB’s proportion of total revenue further rose by 3.1 ppts yoy. Driven by rapid development of OEMs’ EV business, the BHB revenue has reached 21.6% of total revenue in 1H2024, and the Company’s BHB growth is expected to accelerate in the European market. As the penetration rate of NEVs continues to rise, the BHB’s business in the Chinese market will continue to expand, and in overseas markets will also begin to increase. The Company's current business order backlog reached RMB236.0 bn, a hoh increase of 2.6%, of which the Company's current battery housing order backlog is close to RMB125.1 bn. Combined with the boost from the Company's integrated die-cast battery housing project for PHEV models, we expect the Company's BHB revenue to grow at a CAGR of around 29.0% in the next three years.
　　Intelligent exterior decoration parts business continues to expand, and diversified new businesses are beginning to reap results. 1) In the intelligent front module business, Minth's industry's first PC radome for Xiaomi, the pebble-shaped LiDAR with heating function, is in mass production. At the same time, Minth won related projects in North America. A number of American/German OEMs' EV smart panels are in mass production.
　　Minth also won Japanese/Korean OEMs' related joint pre-research projects. 2) In the smart door business, Minth won electric side door and flush door handle projects from HIMA. 3) In the smart tailgate business, Minth secured plastic tailgate projects from China's “new EV forces”. We believe that Minth is gradually becoming one of the world's leading suppliers of intelligent exterior parts, and diversified new businesses are expected to further contribute to the Company's revenue.
　　Risks: 1) Global automotive market sales may fall short of expectations; 2) freight costs and raw material prices may increase; and 3) geopolitics may lead to a slowdown in business expansion.