Description of the event
The company released its 2023 annual report. Revenue for 2023 was 602.32 billion yuan, up 42.0% year on year, net profit to mother of 30.4 billion yuan, up 80.7% year on year, of which 2023Q4 revenue was 180.4 billion yuan, up 15.1% year on year, up 11.0% month on month, and net profit to mother was 8.67 billion yuan, up 18.6% year on year, down 16.7% month on month.
Incident comments
Competition intensified in 2023, industry discount rates increased, and thanks to BYD's scale and high-end overseas expansion, the annual performance was good, and the performance was in line with expectations. In 2023, we achieved revenue of 602.32 billion yuan, an increase of 42.0% year on year, and net profit to mother of 30.4 billion yuan, an increase of 80.7% year on year. Driven by prominent scale effects and the development of overseas and high-end technology, we achieved significant growth in performance. Among them, 2023Q4's revenue was 180,04 billion yuan, up 15.1% year on year, up 11.0% month on month, and net profit to mother was 8.67 billion yuan, up 18.6% year on year, down 16.7% month on month. In 2023, the vehicle business's bicycle revenue was 156,200 yuan, down 7.9% year on year. Among them, 2023Q4 bike revenue was 155,500 yuan, down 14.5% year on year and 2.4% month on month. It is expected to be affected by factors such as Seagull and other model sales and discounts.
Due to quarterly promotion policies, bicycle profits declined slightly in the fourth quarter. The company's gross profit margin in 2023 was 20.2%, up 3.2 pct year on year. The total cost ratio for the period was 12.7%, up 2.8 pct year on year. Among them, the sales expense ratio increased by 0.6 pct, the management cost ratio decreased by 0.1 pct, the R&D cost ratio increased by 2.2 pct, and the financial expense ratio increased by 0.1 pct. Excluding BYD Electronics, the net profit of bicycles after deduction for the whole year was 0.85 million yuan, an increase of 10.6% over the previous year. Looking at the fourth quarter of a single quarter, the gross profit margin was 21.2%, up 2.2 pct year on year, down 0.9 pct from month to month. The total cost ratio for the period was 14.2%, up 3.5 pct year on year, and 1.4 pct month-on-month. Among them, the sales expense ratio increased 0.5 pct month-on-month and the R&D cost ratio increased 1.3 pct month-on-month. After deducting BYD Electronics, the bicycle profit after deduction was 90 million yuan, a decrease of 1,544 yuan over the previous month. Let's break down the main influencing factors: 1) Discounts:
Year-end discount+dealer incentives are expected to have a negative impact; 2) Exports & high-end: 2023Q4 export sales increased to 97,000 units (71,000 units in Q3), an increase of 26,000 units over the previous month. Equation Leopard & Looking up sales volume was 5,712 units and 2001 units respectively. Due to all new volume, Tension reduced 545 units month-on-month, contributing to the increase in performance.
The Honor Edition further strengthens the competitiveness of the basic version and opens up space for overseas travel and high-end development. In mid-late February 2024, the company intensively launched the Glory Edition of models such as Qin PLUS, Dolphin, Han, Tang, and Song PLUS, and the competitiveness of mainstream price models such as Dynasty Ocean was further enhanced. The company's overall weekly insurance continued to recover from 34,000 vehicles of 2.19-2.25 to 620,000 vehicles of 3.18-3.24, with a cumulative increase of 174,000 vehicles from 3.4-3.24. As inventory adjustments are in place, subsequent company product cycles are strong, new cars and facelift models are expected to contribute incrementally, and the high-end and overseas product matrices continue to improve, and the performance level contribution will become stronger as scale increases.
Technology drives new product cycles, and new energy leaders take off again. The company will usher in a big year of new technology and new products in 2024. With the support of the DM5.0 and e4.0 platforms, the main models of Dynasty Ocean Network will be upgraded, continuously upgraded, and stabilized in the mainstream market. Tension, Yangzheng, and Fangchengbao high-end brand models are rich in reserves, speeding up the deployment of the high-end market. Overseas travel continues to gain strength, and the overseas channel layout and model matrix will be further improved. Supported by the scale effect, with overseas expansion and high-end expansion, profitability is expected to remain high without fear of competition. The company's net profit from 2024-2026 is estimated to be 386, 479, 55.7 billion yuan, corresponding to PE 17X, 13X, and 11X, maintaining a “buy” rating.
Risk warning
1. Weak market demand caused sales of new energy vehicles to fall short of expectations; 2. The cost reduction of power batteries fell short of expectations.