Company Reports

BYD’s first-quarter revenue and net profit rose 4% and 11% year over year, respectively. Thanks to higher export contribution and lower battery costs, the firm's gross margin increased 4 percentage points versus a year ago, while industrywide price competition during the period led to higher dealer rebates and selling expenses. We reduce our 2024-26 net profits forecast to factor in lower vehicle prices and higher operating expense ratios. We cut our fair value estimate to HKD 290 per H-share (CNY 259 per A-share) from HKD 300 (CNY 267), which implies a 2024 price/sales ratio of 1.3 times and price/earnings ratio of 24 times. Trading in 4-star territory, we view BYD's H-shares as undervalued.

BYD is the largest new energy vehicle, or NEV, manufacturer in China in terms of sales volume. Targeting the mass market, it produces both battery electric vehicles and plug-in hybrid vehicles, or PHEVs. BYD has established good brand awareness with popular value-for-money models. Its passenger NEV portfolio covers models from subcompact to midsize sedans and sport utility vehicles, in the CNY 70,000-CNY 400,000 price range for mainstream models.

BYD delivered an in-line fourth quarter, with net profit up by 19% year over year and at the midpoint of the company’s preliminary announcement. Thanks to lower battery raw material costs, the company delivered about a 2-percentage-point increase in vehicle margin compared with a year ago despite price competition. We reduce our 2024-25 net profit forecasts to factor in lower vehicle prices and higher operating expenses. We cut our fair value estimate to HKD 300 per share (CNY 267) from HKD 316 (CNY 281), which implies a 2024 price/sales ratio of 1.2 times and a price/earnings ratio of 23.4 times. Trading at more than 25% below our fair value estimate, we view H-shares of BYD as undervalued.

BYD is the largest new energy vehicle, or NEV, manufacturer in China in terms of sales volume. Targeting the mass market, it produces both battery electric vehicles and plug-in hybrid vehicles, or PHEVs. BYD has established good brand awareness with popular value-for-money models. Its passenger NEV portfolio covers models from subcompact to midsize sedans and sport utility vehicles, in the CNY 70,000-CNY 400,000 price range for mainstream models.

BYD is the largest new energy vehicle, or NEV, manufacturer in China in terms of sales volume. Targeting the mass market, it produces both battery electric vehicles and plug-in hybrid vehicles, or PHEVs. BYD has established good brand awareness with popular value-for-money models. Its passenger NEV portfolio covers models from subcompact to midsize sedans and sport utility vehicles, in the CNY 100,000-CNY 300,000 price range.

BYD delivered solid third-quarter results with net profit up by 82% year over year, at the midpoint of the company’s preliminary announcement. Thanks to the strong vehicle margin and recovery of the mobile handset segment, both revenue and net profit beat our expectations. Despite rising industrywide price competition during the period, the company delivered a 3-percentage-point increase in vehicle margin compared with a year ago. In view of the solid results, we lift our 2023-25 net profit forecasts to factor in a higher margin outlook.

No-moat BYD’s second-quarter revenue and net profit grew by 67% and 1.4 times year over year, respectively. Despite rising industrywide price competition during the period, the company delivered a 4-percentage-point increase in vehicle margin compared with a year ago. Our revenue forecast is largely unchanged but we raise our 2023-25 net profit estimates to factor in a higher margin outlook. We raise our fair value estimate to HKD 306 (CNY 272) from HKD 295 (CNY 256), which implies a 2024 price/sales ratio of 1.2 times and price/earnings ratio of 23.3 times. Excluding its stake in BYD Electronics, the implied forward price/sales ratio for the combined automotive and battery business is 1.4 times, in our estimate. Trading at 25% below our fair value estimate, we view BYD's H-shares as undervalued.

BYD is the largest new energy vehicle, or NEV, manufacturer in China in terms of sales volume. Targeting the mass market, it produces both battery electric vehicles and plug-in hybrid vehicles, or PHEVs. BYD has established good brand awareness with popular value-for-money models. Its passenger NEV portfolio covers models from subcompact to midsize sedans and sport utility vehicles, in the CNY 100,000-CNY 300,000 price range.

BYD is the largest new energy vehicle, or NEV, manufacturer in China in terms of sales volume. Targeting the mass market, it produces both battery electric vehicles and plug-in hybrid vehicles, or PHEVs. BYD has established good brand awareness with popular value-for-money models. Its passenger NEV portfolio covers models from subcompact to midsize sedans and sport utility vehicles, in the CNY 100,000-CNY 300,000 price range.

BYD’s first-quarter revenue and net profit grew by 80% and 411% year over year, respectively, accounting for 23% and 21% of our full-year forecast. Despite rising industrywide price competition during the period, the company delivered a 5-percentage-point increase in vehicle margin compared with a year ago. We maintain our revenue forecast but raise 2023-25 net profit by 2%-7% to factor in a higher margin outlook. We raise our fair value estimate to HKD 295 (CNY 256) from HKD 280 (CNY 244), which implies a 2023 price/sales ratio of 1.4 times and price/earnings ratio of 37 times. Excluding its stake in BYD Electronics, we estimate the implied forward price/sales ratio for the combined automotive and battery business is 1.7 times. Trading at 20% below our fair value estimate, we view H-shares of BYD as undervalued.

BYD is the largest new energy vehicle, or NEV, manufacturer in China in terms of sales volume. Targeting the mass market, it produces both battery electric vehicles and plug-in hybrid vehicles, or PHEVs. BYD has established good brand awareness with popular value-for-money models. Its passenger NEV portfolio covers models from subcompact to midsize sedans and sport utility vehicles, in the CNY 100,000-CNY 300,000 price range.

BYD delivered a solid fourth quarter with net profit up by 11 times year over year and at the midpoint of the company’s preliminary announcement. The company delivered a 6-percentage-point increase in vehicle margin despite rising battery costs during the period. In view of the solid results, we raise our fair value estimate to HKD 280 (CNY 244) from HKD 265 (CNY 236), which implies a 2023 price/sales ratio of 1.4 times and price/earnings ratio of 36 times. Excluding its stake in BYD Electronics, the implied forward price/sales ratio for its combined automotive and battery business is 1.7 times. Trading at 25% below our fair value estimate, we view H-shares of BYD as undervalued.

We see intensifying price pressure in China's new energy vehicle, or NEV, market, especially in the mass-market and entry-level premium segments. After Tesla’s late October China price cuts, several automakers followed suit, offering direct discounts, insurance rebates, and other incentives. Coupled with the national subsidy expiring in 2023, we anticipate the CNY 150,000-CNY 300,000 price segment to face greater competition. With such a backdrop, we maintain our preference for Nio for its premium brand positioning and BYD for its strong plug-in hybrid model lineup.

BYD delivered a solid third quarter with net profit up by 3.5 times year over year and at the midpoint of company’s guidance. However, we consider the results a high-quality beat as BYD delivered 5 percentage points increase in vehicle margin and at the same time recorded a CNY 787 million impairment loss during the quarter. If stripping out noncash impairment loss and foreign exchange gain, net profit came in 3% higher than the high end of guidance. While the first nine months' revenue accounted for 75% of our full-year forecast, net profit for the nine months has already exceeded our full-year number thanks to a significant improvement in margin.

BYD is the largest new energy vehicle, or NEV, manufacturer in China in terms of sales volume. Targeting the mass market, it produces both battery electric vehicles and plug-in hybrid vehicles, or PHEVs. BYD has established good brand awareness with popular value-for-money models. Its passenger NEV portfolio covers models from subcompact to midsize sedans and sport utility vehicles, in the CNY 100,000-CNY 300,000 price range.

No-moat BYD delivered a solid second quarter with net profit up by 2 times year over year and at the high end of company’s guidance. Stripping out some noncash items such as foreign exchange gain and impairment loss, net profit still came in 8% higher than the midpoint of guidance. With first-half revenue and profit accounting for 42% and 44% of our full-year forecast, respectively; and the second half being the peak season for auto sales, we maintain our fair value estimate of HKD 315 per share (CNY 258), which implies a 2023 price/sales ratio of 1.7 times. Excluding its stake in BYD Electronics, the implied forward price/sales ratio for the combined automotive and battery business is 2.1 times, in line with Chinese new energy vehicle, or NEV, peers’ 2.0 times.

BYD is the largest new energy vehicle, or NEV, manufacturer in China in terms of sales volume. Targeting the mass market, it produces both battery electric vehicles and plug-in hybrid vehicles, or PHEVs. BYD has established good brand awareness with popular value-for-money models. Its passenger NEV portfolio covers models from subcompact to midsize sedans and sport utility vehicles, in the CNY 100,000-CNY 300,000 price range.

We initiate coverage on BYD with a no-moat rating and fair value estimate of HKD 315 per share (CNY 258). As the largest new energy vehicle, or NEV, manufacturer in China targeting the mass-market segment, BYD will continue to benefit from the vehicle electrification trend. Given significant growth opportunities, we forecast a 39.6 % 2021-24 revenue CAGR and 88.8% net profit CAGR. Our fair value implies a forward 2023 price/sales ratio of 1.7 times. Excluding its stake in BYD Electronics, the implied forward price/sales ratio for the combined automotive and battery business is 2.1 times, in line with Chinese NEV peers’ 2.0 times. With its share price up 75% from the 52-week low of HKD 165 in March, H-shares are in 3-star territory as of Aug. 18, 2022.