Jabil Inc. has recently entered into a definitive agreement with BYD Electronic (International) Company Limited, based in China, to divest its Mobility business. The company aims to focus more on its core businesses. This transaction, valued at approximately $2.2 billion, is anticipated to be the largest of its kind for Jabil, subject to regulatory approvals and customary closing conditions.
Enhanced Financial Flexibility and Strategic Investments
The Mobility business, which is being sold, mainly manufactures printed circuit boards and related products in Chengdu and Wuxi, China. By divesting this business, Jabil aims to improve its financial flexibility in order to provide shareholders with risk-adjusted returns, including incremental share repurchases. The company plans to invest more in high-growth areas such as electric vehicles (EVs), renewable energy, healthcare, AI cloud data centers, and other end markets. This move will solidify Jabil’s position as one of the leading global suppliers of electronic manufacturing services.
Benefits for BYD Electronic
The sale of Jabil’s Mobility business will expand BYD Electronic’s customer base and strengthen its smartphone components business, which has been a significant revenue generator. This transaction is also expected to help BYD Electronic enter new markets and enhance its mobile supply chain.
Growth in Industrial Business and Technological Advancements
Jabil is currently experiencing strong momentum in its industrial business, driven by the increasing adoption of clean and smart energy infrastructure. The company’s top line is being fueled by the growth in solar inverters, smart meters, energy storage & power, and building management solutions. Moreover, Jabil’s focus on improving working capital management, integrating advanced AI and ML capabilities, and leveraging its global presence and connected factory network position the company for continued success.
Secular Growth Opportunities
Jabil anticipates substantial secular growth in various sectors, including EVs, healthcare, renewable energy infrastructure, 5G, and cloud. As the automotive industry undergoes a transformation towards electric vehicles, Jabil’s position in this market is poised to benefit.
Strong Market Position and Global Presence
With over 250,000 employees across 100 locations in 30 countries, Jabil is well-positioned to capitalize on secular growth drivers. The company’s extensive end-market experience, technical capabilities, manufacturing expertise, and global product management contribute to its strong market position. Additionally, Jabil’s centralized procurement process and efficient supply chain management provide customers with end-to-end visibility.
Investor Confidence and Stock Performance
Jabil’s stock has gained 66.6% in the past year, outperforming the industry’s growth of 44.4%. This reflects investor confidence in the company’s strategic direction and growth prospects.
Other Key Picks
In addition to Jabil, other key stocks worth considering are:
- T-Mobile US, Inc. (TMUS) – A national wireless service provider with a strong earnings track record.
- Arista Networks, Inc. (ANET) – A leading provider of cloud networking solutions.
- AudioCodes Ltd. (AUDC) – A provider of advanced communications software and products for the digital workplace.
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