BYD announced its 2023 annual report: The company achieved revenue of 602,315 billion yuan, +42% year over year; net profit to mother was 30.41 billion yuan, +80.7% year over year, net profit of non-return to mother was 28.462 billion yuan, +82% year over year. Overall as expected? 23Q4 revenue was 180,041 billion yuan, +15.1% year over year; revenue was 8.674 billion yuan, +18.6% year over month, -17% month over month; Q4 gross profit margin was 21%, down 0.9 pct. This is due to intense price competition and the concentration of channel subsidies at the end of the year.
The company's R&D expenses in 2023 were 39.575 billion yuan, +112% year-on-year. The R&D cost rate was 6.57%, +2.17pct compared to the previous year, and the 23Q4 R&D cost rate was over 8%. At the end of 2023, the company had 102,800 R&D personnel, +47.6% year over year, accounting for 14.62%.
Looking ahead to 2024, sales volume will hit 3.62 million units, and profit is expected to reach 33.6 billion yuan.
The 24Q1 bicycle profit is expected to exceed 6,500 yuan, corresponding to the Q1 profit or in the 4.5 billion range. We upgraded the Q1 sales volume previously anticipated in the “Reducing Inventory, Adjusting the Structure; Welcoming the New Product Cycle” review to 630,000 units. The loss corresponding to the scale effect is expected to be around -5,000 yuan. At the same time, the estimated annual landing range for Q1 was revised to 3 pct, corresponding to +3,300 yuan.
At the same time, considering that the Honor Edition was launched and delivered in March, the average bicycle discount is 8,000-10,000 yuan. Considering the March delivery factor alone, it is assumed that the quarterly bicycle profit impact will be at the level of -3000 yuan. At the same time, we also took into account many factors such as the increase in bicycle discounts before the Spring Festival, the offset of red envelopes at the end of the year, the increase in the share of high-end brands, and the acceleration of overseas exports. In the end, bicycle profit is expected to exceed 6,500 yuan in 24Q1; in 24Q2, as sales rise, bicycle profits will return to over 7,000 yuan.
New cars have been introduced repeatedly in 24 years, and product competitiveness is expected to continue. The joint efforts of multiple brands, full product coverage, and the upward and high-quality development of the brand will contribute positively to revenue and profit. In addition to the Sea Lion 07 EV previously unveiled at the Guangzhou Auto Show, there will also be the Panther 8, Looking Up U9, Qin L, Yuan UP, and Looking U6, all of which will meet everyone one after another in 2024. We expect to reach an annual sales volume of over 3.62 million vehicles in 2024.
Investment analysis opinion: The competitive landscape is intensifying, and we are optimistic that companies that can continue to increase their market share under rapid changes will most likely reach the end of this major transformation. Taking into account the company's performance in overseas markets, the increase in the company's share of high-end products and the slow release of domestic raw material costs, the company maintained an increase in the 2024-25 revenue forecast from 7917/895.9 billion yuan to 8105/930.7 billion yuan; slightly lowered the 24-25 net profit forecast from 366/43.9 billion yuan to 336.41.5 billion yuan; added a 2026 revenue forecast of 105.6 billion yuan and a profit forecast of 50.6 billion yuan. The corresponding PE is 18/15/12 times. Considering the continuous increase in the company's share and surpassing the profit level of peers, it still maintains an increase in holdings rating.
Core hypothetical risks: policy uncertainty after full overseas travel, macroeconomic policy adjustments, raw material price increases.