Deutsche Bank is bullish on Minth: European NEV demand and resilient margins support a target price increase

Overview

This report is a company research update by Deutsche Bank on Minth Group (0425.HK). Its core conclusion is that the recovery in European NEV demand, Minth's battery box capacity and customer base in Europe, and its margin management capabilities will help the company offset demand and cost pressures in China's domestic auto market. The report maintains a Buy rating and raises the DCF-based target price from HK$41.80 to HK$42.30.

Core views

The report believes Minth's share price is highly correlated with the electrification trend in the European auto market. In 1H 2026, European vehicle registrations rose 6.1% YoY to 7,232,066 units, of which BEV sales rose 35.1% YoY to 1,608,200 units and PHEV sales rose 24.8% YoY to 742,411 units. In June, European BEV registrations rose 51% YoY and PHEV registrations rose 22.7% YoY. Against this backdrop, Minth's battery box business is expected to benefit significantly, with both revenue and profit likely to grow in 1H 2026. The report also points out that China's auto industry faces pressures from declining domestic retail sales, changes in purchase tax and subsidy policies, and rising input costs such as LFP batteries and DRAM. Therefore, it prefers companies with higher overseas exposure, and Minth is named the top pick in China's auto sector.

Analysis framework

The report combines European ACEA vehicle registration data, Minth's battery box business revenue forecasts, historical gross margin performance, and management guidance to assess the company's earnings elasticity; on valuation, it uses the DCF method and cross-references this with the 12-month target price and implied 2026E P/E.

Methodology notes

• Valuation methodsDCF

  discounted cash flow valuation

  The target price is derived from DCF analysis, using a five-year forecast period to cover the maturation process of electrification and smartification trends in China's auto industry. Key assumptions include a 7.9% WACC, 3.3% cost of debt, 3.5% risk-free rate, 6.0% market risk premium, 1.0 beta, 15% tax rate, 73.7% equity ratio, and a 0.5% terminal growth rate.

• industry_dataACEA registration data

  tracking European vehicle registration data

  The report uses ACEA's European vehicle registration statistics to track changes in BEV and PHEV demand, and links growth in European NEV sales with Minth's battery box business revenue and share price performance.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Minth Group 0425.HK

  Core covered name in the report; Deutsche Bank maintains Buy and raises the target price.

  Strengths

  Its European battery box business benefits from BEV/PHEV growth; high overseas revenue share; historically able to maintain or improve aluminum product gross margins even during periods of rising aluminum prices; customers include European automakers such as Mercedes-Benz, BMW, Volkswagen, Stellantis, Renault, and Volvo Car.

  Weaknesses

  Sensitive to the demand cycle for European NEVs and battery box sales; still faces pressure from rising raw material prices and auto industry price competition.

  Comparison

  Compared with auto supply chain companies with higher exposure to China's domestic market, Minth is more favored in the report due to its higher overseas revenue share; the report also mentions BYD and Chery as beneficiaries because of their higher overseas sales targets.

  Risks

  A weaker-than-expected recovery in European NEVs, further price-cut demands from upstream automakers, and rising costs of raw materials such as aluminum.

• China auto sector

  Industry backdrop and relative allocation framework.

  Strengths

  Strong export growth, with vehicle exports in 1H 2026 up 72.5% YoY, partially offsetting the decline in domestic retail sales.

  Weaknesses

  China passenger vehicle wholesale volume fell 5.9% YoY in 1H 2026, and domestic retail volume fell 18.4% YoY; industry input costs are rising and policy support is weakening.

  Comparison

  The report prefers companies with higher overseas exposure rather than companies primarily reliant on domestic demand.

  Risks

  Price competition, fading subsidies, changes in purchase tax, vehicle and vessel tax reform, and rising costs may compress profits for automakers and the supply chain.

• European NEV market

  An important demand driver for Minth's share price and battery box business.

  Strengths

  In 1H 2026, BEV and PHEV sales rose 35.1% and 24.8% YoY, respectively, with even stronger growth in June.

  Weaknesses

  Demand remains influenced by policy support, oil prices, and consumer preferences.

  Comparison

  Germany, France, and the UK were the main markets driving BEV growth in June; Germany, the UK, Italy, and Spain drove PHEV growth.

  Risks

  If policy support is withdrawn or weakened, the recovery in European NEV sales may come in below expectations.

Key data

• Current priceHK$27.30As of 2026-07-22.
• 12-month target priceHK$42.30Raised from HK$41.80.
• 52-week share price rangeHK$46.30-25.95Disclosed in the report table.
• Europe 1H 2026 vehicle registrations7,232,066 units, YoY +6.1%Covers the EU, Iceland, Norway, Switzerland, and the UK.
• Europe 1H 2026 BEV sales1,608,200 units, YoY +35.1%Representing 22.2% of European new vehicle sales.
• Europe 1H 2026 PHEV sales742,411 units, YoY +24.8%Representing 10.3% of the European auto market.
• Europe June BEV registrations360,843 units, YoY +51.0%Representing 25.6% of the European new vehicle market.
• Europe June PHEV registrations146,168 units, YoY +22.7%Representing 10.4% of European vehicle registrations.
• Minth 1H 2026 battery box business revenue forecastRMB4.8bn, YoY +33%Driven by growth in European NEV sales.
• Minth 1H 2026 total revenue forecastRMB13.4bn, YoY +9%Report estimate.
• Minth 1H 2026 overall gross margin forecast28.5%, YoY +0.2 percentage pointsDespite rising aluminum prices, the report expects margins to remain resilient.
• Minth 1H 2026 reported net profit forecastRMB1.43bn, YoY +12%Expected to hit a record high for a half-year period.
• 2026 full-year net profit forecast revision+0.2%Raised from RMB3,049.7m to RMB3,057.1m.
• Implied valuation from target price13.4x 2026E P/EValuation corresponding to the DCF target price.
• Minth overseas revenue share62%Share of total revenue coming from overseas in 2H 2025.

Impact & implications

If European EV penetration continues to rise, Minth's European battery box business and overseas revenue exposure are likely to become the main drivers of earnings growth and provide relative defensiveness during a period of price competition, fading policy subsidies, and rising costs in China's domestic auto industry. The target price increase is modest, but the Buy rating and approximately 55% implied upside reflect the report's positive view on the company's medium-term earnings growth.

Risks

• Battery box sales come in below expectations, especially if the recovery in NEV sales is weaker than expected or policy support shifts more favorably toward conventional vehicles.
• Upstream automakers demand further price cuts amid industry-wide price competition, causing Minth's margins to fall short of expectations.
• Rising prices for raw materials such as aluminum may compress gross margins, although management believes the impact will be limited.
• Weak domestic auto demand in China, changes in purchase tax and subsidies, and vehicle and vessel tax reform in 2027 may continue to weigh on industry sentiment.
• The report discloses that Deutsche Bank or its affiliates have received compensation from the company for non-investment banking services in the past year, and there are related service agreement disclosures.

What to watch

• Whether monthly BEV and PHEV registrations in Europe continue the strong growth seen in June.
• Whether battery box revenue in Minth's 1H 2026 interim results comes close to the RMB4.8bn forecast.
• Whether overall gross margin in 1H 2026 reaches 28.5%, and the actual impact of rising aluminum prices on margins.
• Order trends and capacity utilization at major European customers, especially capacity performance in Serbia, Czech Republic, Poland, and France.
• How price competition, purchase tax, subsidies, and vehicle and vessel tax policy changes in China's auto industry are transmitted to supply chain profits.
• Whether Minth's overseas revenue share is maintained or increased.