20231031-招银国际-比亚迪-002594.SZ-Profit_may_continue_to_beat_in_next_few_quarters_4页_817kb

BYD (1211 HK) Analyst Report Summary

Analyst Upgrade and Key Ratings

• Rating Change: From HOLD to BUY (upgraded on 31 Oct 2023).
• Target Price: Increased from RMB 270 to RMB 300 (a +21.8% upside from current price of RMB 246.20).

Rationale for Upgrade

• BYD's 3Q23 net profit of RMB 10.4 billion exceeded forecasts due to strong gross profit margin (GPM) of 21.7%, SG&A control improvements, and higher R&D investment.
• Sales volume growth has outperformed expectations, supported by premium models, exports, and economies of scale. Weaker concerns about model cycle and margin dent from potential overcapacity are now mitigated.
• R&D spending is aggressive, potentially helping catch up in autonomous driving and smart cockpit developments.

Financial Highlights and Forecasts

• Current Performance: 3-mth net profit growth -8.7% (absolute) but relative to market positive.
• Earnings Forecast:
  • FY24E sales volume expected to rise 23% YoY to 3.7 million units, driven by China's NEV wholesale growth.
  • FY24E net profit revised up 29% to RMB 39.4 billion (or RMB 9,700 per vehicle excluding BYDE), despite potential margin narrowing due to competition.
  • Valuation based on 22x FY24E P/E, reflecting a 10% AH premium.
• Historical Data: Revenue growth from 38% YoY in FY21A to 42.3% in FY23E, with improved margins and ROE.

Risks

• Key risks include lower NEV sales volume, margin pressures, and broader sector de-rating. Valuation could be affected by Tesla's higher P/E and other factors.

Summary Conclusion

The upgrade reflects robust earnings prospects, driven by sustainable growth and innovative advancements, despite competitive pressures. Target price justified by positive outlook and comparable valuations.