Company Profile

Minth Group is a world-renowned supplier engaged in the design, manufacturing and sales of automotive interior and exterior trim and body structure parts. The domestic market share of its core products exceeds 30%. The company has production bases in China, the United States, Mexico, Thailand, Germany, Serbia and other countries, and its customers cover major vehicle companies in the market. Based on a variety of new materials and surface treatment technologies, in recent years the company has developed new electrified and smart product lines such as aluminum power battery boxes and smart front faces, forming a series of competitive terminal products.

Investment Summary

Strong Profit Growth Maintained in H1 2025, Net Profit Up Nearly 20%
Minth Group recorded revenue of RMB12.287 billion (RMB, the same below) in H1 2025, up 10.8% yoy; net profit attributable to the parent company reached RMB1.277 billion, equivalent to an increase of 19.5% yoy. The main drivers behind the profit growth include: 1) continued ramp-up of orders for NEV components such as battery boxes, leading to higher capacity utilisation; 2) incremental earnings contribution from capacity ramp-up at overseas production bases; 3) decline in unit transportation costs and favourable exchange rates. Meanwhile, the Company continued to advance its localisation strategy and implement effective cost control measures, resulting in lower expense ratios.

By region, domestic revenue was RMB4.31 billion, down 4.9% yoy, mainly due to the decline in market share of joint venture brands in China. International business remained strong, with revenue up 21.6% yoy to RMB7.98 billion, primarily driven by rapid growth in battery box and structural component businesses in the European market, as well as stable contributions from traditional exterior parts in international markets. The proportion of international business in total revenue rose by 5.2 ppts from 59.7% at the end of 2024 to 64.9%. The localisation strategy in North America, Europe and other regions has effectively reduced tariffs and geopolitical risks, while enhancing competitiveness in local markets.

Battery Box Becomes the Largest Business Segment
In H1, the Company's revenue from plastic parts, metal and trims, battery boxes, and aluminium parts reached RMB2.87/2.66/3.58/2.47 billion respectively, up 0.9%/4.7%/49.8%/4.1% yoy. Their respective shares of total revenue changed by -2.3/-1.3/+7.6/-1.3 ppts yoy, to 23.3%/21.6%/29.2%/20.1%.

During the review period, the Company achieved breakthroughs in its battery box and body chassis structure businesses, with a more balanced customer mix: it broke into the structural component business for Toyota Europe, and secured chassis structure orders from multiple Chinese clients such as Great Wall and Geely; entered the battery box business of Chery for the first time and secured repeat orders from BYD; made its first breakthrough in battery box structural parts for General Motors; and continued to expand its battery box business with Stellantis and Volkswagen. In the area of smart interior and exterior parts, the Company achieved breakthroughs in bumper assembly business with Ford North America and Renault, while continuing to secure orders from clients such as Toyota, Hyundai-Kia, Changan, and General Motors.

Profitability Continued to Improve Steadily

During the period, gross margin was approximately 28.3%, down 0.2 ppts yoy, mainly due to the rising contribution from the battery box business. The gross margins of the four major business segments were 26.1%, 28.1%, 23.0%, 32.6%, representing yoy changes of +2.0, +1.6, +2.4, -2.4 ppts, respectively. Among them, the battery box segment achieved a gross margin of 23%, moving closer to the 25% target. During the period, selling, administration and R&D expense ratios declined by 0.6, 0.1, and 0.5 ppts yoy respectively, lifting net profit margin by 0.8 ppts to 10.4%, indicating an improvement in the Company's profitability.

Operating cash flow rose by RMB 510 million yoy to RMB2.24 billion in H1 2025, reflecting sound cash flow conditions, which provide a solid basis for dividend payments and share buybacks. Capital expenditure stood at RMB902 million, down 17.5% yoy, as the Company has passed its peak investment phase and will focus on equipment upgrades and flexible transformation going forward. In H2, as several new overseas production lines continue to ramp up, overall gross margin is expected to see a slight improvement mom.

New Businesses and Emerging Segments Gearing Up

The Company is actively exploring new business segments and has made forward-looking deployments in areas such as eVTOL (electric vertical take-off and landing aircraft), wireless charging for electric vehicles, and bionic robots---including core components such as electronic skin, smart masks, integrated joints, bodies, and rotors. During the period, the Company partnered with leading enterprises including EHang and Zhiyuan Robotics. Some products have completed small-batch sample deliveries to multiple customers, and some have already secured mass production orders, with revenue contribution expected to begin in 2026/2027. With the rapid development of robotaxis and autonomous driving, the wireless charging industry is projected to experience explosive growth in 2026. At the same time, leveraging its battery box technology, the Company is also focusing on the development and implementation of AI liquid-cooling system-related products, aiming to capture opportunities in the rapidly growing artificial intelligence market.

Valuation

The company maintains stable overall operations, with continuous improvement in profitability, demonstrating strong risk resilience and growth adaptability. Meanwhile, the cultivation of new business areas and the expansion of new ventures are expected to foster a second growth curve, driving the company's sustainable development in the medium to long term.

We slightly revised the expected EPS for 2025/2026/2027 to 2.35/2.77/3.25 (from 2.43/2.89/3.30) yuan for the under expected GM.

We believe that it is reasonable to give the Company a valuation of 12.7/10.6/9.0 x P/E and 1.5/1.4/1.2x P/B for 2025/2026/2027, equivalent to target price of HK$ 32.6 and Accumulate rating.

P/E Band

Source: Wind, Phillip Securities Hong Kong Research

Financials

(Closing price as at 17 October 2025)

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