Investment Summary

Financial Data: Over 20% Decline in Profit of the First Three Quarters

New Energy Automobile Business Sails Again after the Twists and Turns

Cloud Rail Services and Mobile Phone Components Business Will be Another Two Important Growth Points for Future Earnings

Investment Thesis

We adjusted the expected EPS of 2017/2018 to RMB1.44 / RMB 2.45 and revise the target price to HKD84.43, which corresponded to 49/28x P/E and 3.5/3.1x P/B ratio for 2017/2018. We give the rating of “Accumulate”.

Financial Data: Over 20% Decline in Profit of the First Three Quarters

BYD recorded revenue of RMB73.93 billion in the first three quarters of 2017, which was basically flat yoy. The profit attributable to the owner of the parent company was RMB2.79 billion, down 23.8% yoy. EPS was RMB0.96. And the results were basically in line with the Company’s previous result forecast of RMB2.74 – 2.93 billion. The Company also expects to record net profit attributable to shareholders of RMB4.04 – 4.29 billion in 2017, down 20.03% – 15.09% yoy. As a leader in the new energy industry, the decline in the first three quarters of BYD mainly comes from the change of industry prosperity caused by industrial policy adjustment.