BYD (1211 HK) Catalyst lies in valuation reshaping December 11, 2020 222

PSR Recommendation: BUY Status: Upgraded
Target Price: HKDHKD241

Investment Summary 3

Update of sales volume in November: “Han” is getting better and the proportion of highend models continues to expand According to the latest data, BYD sold 53,943 vehicles in November, up 31% yoy and up 13% mom, including 26,700 new energy passenger vehicles, up 139.4% yoy and up 15.9% mom, 1,137 new energy commercial vehicles, up 109% yoy and down 3% mom, and 27,300 traditional fuel vehicles, up 11% yoy and down 9% mom. The sales volume of new energy passenger vehicles showed strong growth momentum. The growth was mainly driven by pure electric models, up 128% yoy, which is resulted from Han EV. The hybrid vehicles witnessed a significant increase of 174%. The increase was mainly underpinned by Han DM and new Tang DM. The increase in fuel vehicles came mainly from Song Pro. In terms of product structure, the proportion of high-end models continued to expand. BYD’s new-generation flagship Han was launched in July. Its sales volume climbed to 7,545 vehicles in October, and reached 10,105 vehicles in November, mainly high-end versions. Currently, the delivery cycle of pre-sale orders is longer than two months. Therefore, we expect the Company’s total vehicle sales volume will continue to soar at the end of the year. Another popular model, the new Tang DM, has been improved in terms of the fuel consumption, interior trim, and power supply. Its product strength has also been further enhanced. Regarding the cumulative sales in the past 11 months, the sales volume of BYD’s automobiles, new energy passenger vehicles, new energy commercial vehicles and traditional fuel vehicles reached 418,000, 125,000, 8,251 and 183,000 vehicles, respectively, down 16% and 36 % and up 14% and 6.3% yoy, respectively. Taking into account the low base in the same period last year, the effect of the auto show, and the mission at the end of the year, we expect the strong growth momentum in the fourth quarter will still continue. Next year, BYD’s Dynasty series will start a comprehensive upgrade. For new models equipped with blade batteries and new DM platform technology, the Company will further reduce costs and increase efficiency, lead technological innovation, and comprehensively enhance the core competitiveness of the product..

2020Q3 Result hit a record high According to the Company’s report for three quarters, BYD reported a revenue of RMB19.68 billion, RMB40.82 billion and RMB44.52 billion in the first three quarters of 2020, down 35.1% and up 28.1% and 40.7% yoy, respectively. The net profit attributable to the parent company was RMB113 million, RMB1.55 billion and RMB1.75 billion, respectively, down 85% and up 120% and 1362.7% yoy, respectively. Earnings in the third quarter hit a record high. In terms of profitability, the gross margin in the first three quarters reached 17.7%, 20.5% and 22.3%, respectively, down 1.4 ppts, and up 5.2 ppts and 8.5 ppts yoy. The gross margin in the third quarter also set new record high for the Company. In addition to the low base in the same period last year, the substantial increase in gross margin was mainly due to the expanded proportion of high-end models in the automotive sector and the increased contribution of BYD Electronic(285@HK) (BYD Electronics recorded a net profit of RMB1.86 billion in Q3, up 312%).

About the author

Profile photo of Zhang Jing

Zhang Jing
Phillip Securities (HK)

Bachelor Degree in Tongji University of Engineering; Master Degree in East China Normal University of finance. Currently covering the automobile and air sectors. She has years of experience in investment research and is good at combining analysis for the companies with industry prospects.

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