Bank of America: BYD Electronic posts third-quarter revenue growth but lower profit; BofA cuts earnings forecasts and bets on new liquid-cooling business

Why did revenue rise while profit fell in the third quarter?

Third-quarter 2026 revenue was 45.223 billion yuan, up 6% year over year. Net profit was 537 million yuan, down 62% year over year but up 35% from the second quarter.
Revenue for the first three quarters reached 71% and 69% of BofA’s and the market’s full-year forecasts, respectively, broadly in line with expectations. Net profit reached only 27% and 43% of those forecasts, respectively, below expectations.
A shift in product mix weighed on gross margin: third-quarter gross margin was 4.5%, down from 6.9% a year earlier; despite revenue growth, gross profit fell 31% year over year.

Management said third-quarter consumer electronics revenue was approximately 30 billion yuan, down year over year amid weak end-market demand. Android demand is expected to remain weak through 2027, potentially affecting customer purchases.
Third-quarter automotive revenue exceeded 10 billion yuan, with double-digit growth both quarter over quarter and year over year; server assembly revenue reached 1 billion yuan. BofA also believes Apple orders are resilient and can partly offset weak Android and automotive customer purchases.

The company has begun gradually ramping up liquid-cooling plate production for Nvidia. Management expects it could contribute revenue starting in the first quarter of 2027.
The company is positive about participating in zero-pressure-drop quick-connect products in the second half of 2027 and guides for liquid-cooling revenue to exceed 1 billion yuan in 2027. It also continues to work with Nvidia on power-supply systems and ultra-high-density small form-factor pluggable products, while pursuing opportunities with domestic AI server customers.

BofA cut its 2026–2028 net profit forecasts by approximately 24%–42% because margins are improving more slowly than expected and competition in iPhone casings has intensified. Its 2026 forecast fell from 3.502 billion yuan to 2.025 billion yuan, and its 2027 forecast from 4.888 billion yuan to 3.718 billion yuan.
BofA still expects 2027 net profit to rise approximately 84% from its 2026 forecast, but its 2027 forecast is 6% below market consensus.
BofA cut its price target from HK$29 to HK$25, adjusting its valuation basis to 13 times forecast 2027 earnings. A slower-than-expected recovery in consumer electronics demand is the reason for using the lower multiple. The bank maintained its Neutral rating.