China Merchants Securities expects the profit margin of BYD shares (01211) to pick up starting next quarter.
The Zhitong Finance App learned that China Merchants Securities released a research report saying that maintaining the “increase in holdings” rating of BYD shares (01211), the company's profit margin is expected to rise starting the next quarter. The profit forecast remains unchanged, and the target price is HK$300.
According to the report, BYD's net profit for the first quarter was RMB 4.57 billion (same below), up 10.6% year on year, in line with expectations. The performance was steady under the overall weak conditions of the market. The increase in the share of high-end products and exports was the key to driving performance growth. The gross margin was 21.9%, an increase of 4 percentage points over the previous year. The gross profit margin of automobile sales (excluding BYD Electronics) was 28.1%, up 7.3 percentage points from the previous year.
The bank pointed out that the sharp increase in automobile gross margin against the trend is the biggest highlight of the quarterly report. On the one hand, it reflects the company's strong ability to control costs on a large scale, and secondly, it reflects the upgrading of the product structure. High-margin Tension, Equation Leopard, and Yewang brands account for 6.2% of sales, and passenger car exports contribute 15.7% of total sales.