Bank of America: Bethel’s third-quarter revenue rose 34%, while expenses weighed on profit growth

Why did third-quarter revenue grow faster than profit?

Bethel reported third-quarter 2026 revenue of 4.275 billion yuan, up 34% year over year and 19% quarter over quarter. Net profit attributable to shareholders was 388 million yuan, up 5% year over year and 4% quarter over quarter. BofA considered the overall results in line with its expectations.
Excluding the impact of consolidating Yubei, third-quarter revenue was approximately 3.5 billion yuan, up 10% year over year and slightly higher quarter over quarter. Chery, Geely, Vinfast and the Mexico plant contributed incremental revenue.
As profit grew more slowly, operating expenses rose 45% year over year to 391 million yuan, and expenses as a share of revenue increased from 8.4% a year earlier to 9.2%; pretax profit was broadly flat year over year.

Third-quarter sales of intelligent electronic control products totaled 2.78 million units, up 48% year over year. Of these, electronic parking brake products accounted for 1.2 million units, up 15%, and one-box products accounted for 640 thousand units, up 41%.
Overall gross margin was 20.3%, down 0.2 percentage points year over year; excluding Yubei, it was 21.8%, up 1.2 percentage points. BofA attributed the latter improvement to increased sales of intelligent electronic control products, in-house component supply, higher utilization at the Mexico plant and cost-reduction measures, partly offset by product price cuts.
Product growth was uneven: third-quarter disc brake sales were 1.99 million units, down 9% year over year; lightweight component sales were 3.83 million units, down 2%.

Overseas revenue rose 20% year over year in the first three quarters of 2026, with Mexico revenue increasing from 500 million yuan a year earlier to 720 million yuan. The company aims to achieve overseas revenue of 6 billion to 8 billion yuan by 2030, accounting for 20% to 30% of total revenue.
The company won new Ford Europe projects for lightweight brake calipers and electronic parking brakes. Orders for mechanical brakes and electronic parking brakes grew rapidly, and brake-by-wire systems also secured projects. The pace at which projects convert into revenue will affect the achievement of its overseas target.
Bethel expects Yubei’s 2026 revenue to grow year over year, driven by dual-pinion electric power steering, intermediate shafts and rack-assist steering products. The company also expects Renault and Ford orders to drive Yubei’s overseas revenue growth and plans to establish production capacity in Southeast Asia, Morocco and North America.

BofA raised its revenue forecasts for 2026 through 2028 by 3.8%, 4.0% and 4.2%, respectively, including a 7.1% increase in its intelligent electronic control revenue forecast for each year. Over the same period, it adjusted its net profit attributable to shareholders forecasts by approximately -1%, -2% and +1%, respectively.
BofA maintained its buy rating but lowered its price target from 38 yuan to 35 yuan. It shifted its valuation basis to forecast earnings per share for 2027 and reduced its target price-to-earnings multiple from 22 times to 18 times. The bank based its valuation on a forecast earnings-per-share compound annual growth rate of 20% from 2026 to 2028 and applied a PEG ratio of 0.9.
BofA is optimistic that the company can use its cost advantage to gain braking business share from overseas suppliers, but also noted that tariffs, higher raw material prices and price competition in the automotive industry could affect growth and profitability.