Europe growth and margin resilience support Minth Group, but Goldman Sachs maintains a Neutral rating

Overview

This report summarizes Minth Group management discussions released by Goldman Sachs after the Asia Communacopia + Technology conference. The core conclusion is that the company’s double-digit revenue and net profit growth targets remain visible, strong performance in Europe is offsetting weaker-than-expected performance in China since the start of the year, and margins remain resilient despite rising raw material costs. At the same time, Goldman Sachs maintains a Neutral rating on Minth Group, believing global auto demand is approaching a peak in major markets, and the next stage of valuation rerating will require clearer demand improvement or monetization of new businesses.

Core views

Minth Group’s growth support comes from three main drivers. First, rising NEV penetration in Europe and a strong customer project cycle are reinforcing demand for battery enclosures and BBU products. Second, emerging businesses such as robotics, AI computing infrastructure, and SOFC fuel cells provide medium- to long-term incremental growth, with robotics already having clear revenue targets and liquid cooling carrying relatively high margin expectations. Third, although aluminum price inflation is weighing on the aluminum business, battery enclosure contract pass-through, in-house smelting and recycling, strategic inventory, and price increases passed on to customers help the company maintain overall margin resilience. Constraints include weaker China market performance, slower global auto demand growth, OEM pricing pressure, and uncertainty around the ramp-up of new products.

Analysis framework

The report mainly bases its judgment on management meeting discussions, company operating guidance, product line and customer structure information, as well as Goldman Sachs’ forecasts for global auto demand, valuation multiples, and the company’s earnings growth path. Valuation uses 12.0x 2026E P/E to derive the 12-month target price of HK$33.5, and the rating is assessed by combining 12-month forward P/E, historical mid-cycle levels, the global auto demand cycle, and changes in the company’s net profit growth rate.

Methodology notes

• Valuation method12.0x 2026E P/E

  price-to-earnings valuation

  Goldman Sachs sets a 12-month target price of HK$33.5 based on 12.0x 2026E P/E, and notes that the current 12-month forward P/E is about 12x, close to the historical mid-cycle level.

• Stock attribute frameworkGS Factor Profile

  growth, financial returns, valuation multiples, and composite factor comparison

  Goldman Sachs' factor profile compares the stock with its coverage universe and sector peers across growth, financial returns, valuation multiples, and composite indicators.

• M&A probability frameworkM&A Rank

  acquisition target probability tiers

  Goldman Sachs uses M&A Rank levels 1 to 3 to assess the probability of a company becoming an acquisition target; 1 indicates high probability, 2 medium, and 3 low.

Asset mapping & comparison

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

• Minth Group (0425.HK)

  subject company of the report

  Strengths

  Strong European growth, high market share in battery enclosures and BBU business, coverage of emerging businesses including robotics, AI liquid cooling, and SOFC, and resilient margins despite rising aluminum prices.

  Weaknesses

  China market performance has been below expectations since the start of the year, and the traditional auto parts business is affected by peak global auto demand and customer pricing pressure.

  Comparison

  Current 12-month forward P/E is about 12x, close to the historical mid-cycle level; Goldman Sachs believes rerating depends on the global auto demand outlook and new product monetization.

  Risks

  European and U.S. auto production coming in below expectations, OEM pricing pressure exceeding expectations, and slower-than-expected new product development.

• BYD

  customer and potential source of incremental growth

  Strengths

  BYD new model launches may drive acceleration in China battery enclosure business from April onward; the company has secured business related to BYD's Hungary plant and is discussing opportunities at the Brazil plant.

  Weaknesses

  Some businesses are still under discussion or do not include battery enclosures, so actual order conversion still needs to be monitored.

  Comparison

  BYD-related opportunities mainly reflect incremental supply chain demand in China and overseas NEV markets, complementing existing European customer projects.

  Risks

  The launch pace of new models, the scope of overseas plant business, and battery enclosure order acquisition may fall short of expectations.

• Volkswagen Global

  largest customer

  Strengths

  It is Minth Group's largest customer, accounting for 10%-12% of total revenue, supporting visibility in the European business.

  Weaknesses

  A single large customer may still create project-cycle and pricing negotiation pressure.

  Comparison

  The company emphasizes customer diversification; although Volkswagen Global is the largest customer, its share remains at 10%-12%.

  Risks

  Weaker-than-expected European auto production or NEV penetration could affect orders.

Key data

• 2026 capex planRmb2.5bnOf which 60%-70% is planned for regions outside China, covering demand such as robot capacity expansion.
• Long-term net profit targetNet profit CAGR 20%The company also targets ROE of 12%-15%.
• Robotics revenue targetRmb500mn in 2026, Rmb1bn in 2027Near-term margin is not the primary goal; the long-term target can approach auto parts business margins.
• Liquid cooling gross margin expectation35%-45%The company believes pricing pressure in AI computing infrastructure liquid cooling is lower than in automotive.
• Largest customer revenue shareVolkswagen Global accounts for 10%-12% of total revenueThe report highlights customer diversification.
• European NEV project coverageSupplied 8 of the top 15 best-selling NEV models in Europe last yearThis reflects the company's involvement in the European product cycle.
• European battery enclosure market shareabout 40%The company said its share in Europe's battery enclosure market reached about 40% last year.
• European BBU business shareabout 70%The company said about 70% of its BBU business came from Europe last year.
• Target priceHK$33.5Based on 12.0x 2026E P/E.
• Earnings growth forecast path24% in 2023/24, 10% in 2025/26E, 9% in 2027EGoldman Sachs expects slower global auto demand growth to reduce Minth's net profit growth rate.

Impact & implications

For investors, Minth Group’s short-term catalysts are European NEV demand, overseas capacity expansion, and its ability to defend margins; medium-term catalysts are whether new businesses such as robotics, AI liquid cooling, and SOFC can turn thematic expectations into meaningful revenue and profit contributions. Because Goldman Sachs believes global auto demand in major markets such as China, the United States, Europe, and Japan is approaching a peak, and other businesses still face pressure, the report remains cautious on valuation rerating.

Risks

• European and U.S. auto production being better or worse than expected will affect the company’s revenue and profit.
• OEM customer pricing pressure may be stronger or weaker than expected.
• The pace of new products such as robotics, AI computing infrastructure, and SOFC may be faster or slower than expected.
• Rising aluminum prices may continue to pressure aluminum business margins, although the company is buffering this through vertical integration and price pass-through.
• Weaker-than-expected China market performance may continue to offset strong growth in Europe.

What to watch

• NEV penetration in Europe and the sustainability of the company's battery enclosure and BBU orders.
• The recovery in China battery enclosure business after April, especially order contributions from BYD's new models.
• The progress of robotics revenue targets of Rmb500mn in 2026 and Rmb1bn in 2027.
• Whether the AI liquid cooling business can maintain a 35%-45% gross margin after scaling up.
• Aluminum price trends, customer acceptance of price increases, and the share of coverage from internal smelting and recycling.
• Overseas capacity expansion progress, especially the rollout of Phase 2 in November/December.