Incident: BYD released its 2023 annual report. The company achieved revenue of 602.32 billion yuan in 2023, +42% year over year; realized net profit of 30.4 billion yuan, +80.7% year over year. In 2023, the company's gross sales margin reached 20.2%, up 3.2 pcts year on year, and the net sales margin reached 5.2%, up 1 pcts year on year.
In 2023, the company's sales volume exceeded 3 million units, and gross margin was optimized year-on-year. The company's sales volume in 2023 reached 3,024 million vehicles, up 62% year on year, of which export sales reached 243,000 units, up 334.2% year on year.
The company's sales volume increased dramatically, driving high revenue and performance and reaching record highs. By business segment, the company's revenue from the automobile, automobile-related products and other products business reached 483.453 billion yuan, up 48.9% year on year. The gross margin of the sector reached 23.02%, up 2.63 pcts year on year; revenue from the mobile phone parts, assembly and other products business was about 118.577 billion yuan, up 20% year on year. The segment's gross margin reached 8.78% for 23 years, up 2.72 pcts year on year.
The Honor Edition was a hit, and both generations conquered the market. After the Spring Festival, the company successively launched various Honor models such as the Qin PLUS, and the price was generally reduced by 20,000 to 30,000 yuan. BYD achieved sales volume of 302,500 units in March, up 147% from February, of which 38,400 units were exported. We anticipate that the company will launch a new Qin car/marine life car in Q2, forming a double generation with Qin PLUS to seize the A-class market.
The New Year of Products & Technology helps improve brand power. The company's facelift Tensei D9 broke 11,300 in 12 hours after launch. In terms of new models, new models such as the Sea Lion 07, Upward U7, and Tense Z9GT are expected to contribute to higher sales. On the technical side, we expect the DM 5.0 and e4.0 platforms to be released in 2Q24/4Q24, respectively. We expect the company's sales volume to reach 3.7 million units in 2024, of which 450,000 will be exported.
Profit forecast: The company's 2023 performance is in line with expectations, with impressive sales in March. With the successive releases of new vehicle & new technology platforms in the second quarter, it is expected to start a new upward cycle. We expect the company's revenue in 2024-2026 to be 7038/8012/922 billion yuan, respectively, and net profit to mother will be 363/423/53.7 billion yuan, respectively. The current stock price corresponds to PE 17.0/14.6/11.5x, maintaining a “buy” rating.
Risk warning: Risk of majority shareholders reducing their holdings; the internationalization process falls short of expectations; capacity expansion falls short of expectations; profits fall short of expectations; industry growth falls short of expectations; industry competition intensifies.