Core views
The company's revenue in 2023 was 602.32 billion yuan, +42.04% year on year, and net profit to mother was 30.4 billion yuan, +80.72% year over year. Net profit after deduction was 28.46 billion yuan, +82.01% year over year, close to the median performance forecast; 23Q4 net profit to mother was 8.674 billion yuan, +18.6% year over year, -16.7% month on month. In terms of bicycle profit, the 23Q4 sales volume of BYD was 944,800 units. After deducting BYD Electronics, the net profit of 23Q4 bikes was 0.85 million yuan, -16.2% YoY and -25.9% month-on-month. At the same time, it is estimated that the reduction in lithium carbonate prices contributed about 3,000 to bicycle profits. At the same time, the scale of R&D expenses and impairment accruals exceeded the previous quarter. If the impact of R&D and impairment is not taken into account, the actual operating level of bicycle profits did not change much from month to month. In '24, the company's high-end, globalized, and its determination for intelligent transformation was clear. As smart driving functions were gradually implemented in '24 and valuations entered an upward channel, high-end and overseas sales contributed to incremental profits, and I am optimistic that the company will continue to grow.
occurrences
On March 27, the company released its 2023 financial report. The company's revenue for 2023 was 602.32 billion yuan, +42.04% year-on-year, and net profit to mother was 30.4 billion yuan, +80.72% year-on-year. Net profit after deduction was RMB 28.46 billion, +82.01% year-on-year, close to the median performance forecast.
Brief review
Net profit returned to mother for the whole year exceeded 30 billion dollars:
1) The company's revenue in 2023 was 602.32 billion yuan, +42.04% year-on-year, of which the automobile and battery sector revenue was 483.45 billion yuan, +48.9% year-on-year;
2) The company's net profit to mother in 2023 was 30.4 billion yuan, +80.72% year-on-year. Net profit after deduction was RMB 28.46 billion, +82.01% YoY, close to the median performance forecast; 3) Net profit for 23Q4 was RMB 8.674 billion, +18.6% YoY, and -16.7% YoY; of these, the automotive and battery sector's net profit to mother reached RMB 8.01 billion, +15.9% YoY and -15.0% YoY, and BYD Electronics owes BYD 673 million yuan in profit.
The decline in Q4 bicycle profits was mainly affected by increased R&D, depreciation, and discounts1) In 23Q4, BYD sold 944,800 units, +38.2% year-on-year and +14.7% month-on-month. After deducting BYD Electronics, 23Q4 Bike's net profit was 0.85 million yuan, -16.2% year-on-year and -25.9% month-on-month.
2) It is estimated that the reduction in lithium carbonate prices contributed about 3,000 to bicycle profits (23Q4 lithium carbonate price decreased by about 100,000 month-on-month, and the installed capacity of BYD batteries in 23Q4 was about 50 GWH, based on the calculation of 1 GWH corresponding to 600 tons of lithium carbonate, contributing an additional 3 billion yuan in profit over the month-on-month period, and about 3,000 yuan for bicycles);
3) 23Q4 R&D expenses were 14.637 billion yuan, an increase of 3.5 billion yuan (30,000 R&D team personnel increased in 23 years, +47.6% year over year), and bicycle R&D expenses reached 0.55 million yuan; depreciation accrued 1.341 billion yuan (mainly inventory price drop losses), an increase of 430 million yuan over the previous quarter. The scale far exceeded the previous quarter. Without considering the impact of R&D and impairment, there was little change in bicycle profit from month to month at the actual operating level.
Accelerated intelligence, continuous breakthroughs in high-end and globalization:
1) The company's main brand base is stable, and the “Honor Edition”, which has strong market competitiveness, and new products such as Qin L and Yuanup have been launched one after another, and the base is growing steadily; the “Dynasty + Ocean + Tense+ Looking Up+ Equation Panther” brand matrix has taken shape; at the same time, the company continued to expand overseas markets, exporting more than 240,000 vehicles in 23 years.
2) BYD Dream Day 2024 showcased the company's new layout in terms of intelligent driving and smart cockpit, fully demonstrating BYD's own hardware advantages and future “growth” path of software in the direction of intelligent and electronic integration. Intelligent products were launched on the market at an accelerated pace in 24 years.
3) In '24, the company became high-end and globalized, and its determination for intelligent transformation was clear. With the gradual implementation of smart driving functions in '24 and valuations entering an upward channel, high-end and overseas sales contributed to incremental profits, and I am optimistic that the company will continue to grow.
Investment advice: We expect the company's net profit to be 335.6/443.0/58.55 billion yuan in 2024-2026, corresponding to PE 18.39/13.94/10.54x, maintaining a “buy” rating.
Risk analysis
1) The risk of fluctuations in raw material prices. Lithium carbonate costs account for a relatively high proportion of the company's new energy passenger vehicle battery costs. If the price of lithium carbonate falls low or rises again in the future, the company's material costs will fall as fast as expected.
2) The risk of increased competition in the industry. At present, the introduction of new energy passenger vehicle products by various OEMs is clearly accelerating, and competitors are lowering product prices. If market competition increases significantly, the company's sales growth will be affected, and the company's operating income will fall short of expectations.
3) The risk that demand does not meet expectations. The company's main business growth comes from new energy passenger vehicles. If the increase in the penetration rate of new energy vehicles falls short of expectations, or if the overall demand for passenger vehicles falls short of expectations, the company's revenue will fall short of expectations.