Incidents:
On June 2, 2024, BYD Auto released its May production and sales report: The company achieved 331,800 vehicle sales in May, which was +38.2%/+6% month-on-month, respectively. Passenger car sales in January-May 2024 totaled 1.267 million units, +27.1% year-on-year. The year-on-year trend showed an upward trend, and the company's development was steady.
Investment highlights:
The company's sales volume continued to grow in May 2024, with a steady increase in share. Among them, Dynasty and Ocean brands achieved sales volume of 315,000 units, +38.2%/+5.8% month-on-month; Tension sold 12,200 units, +11.1%/+9.9% month-on-month, respectively; 608 Yangfan cars, -36.1% month-on-month; and Equation Bao Motor 2,430 units, +15.2% month-on-month. Passenger car exports were 37,500 units, or +267.5%/-8.6% month-on-month, respectively.
The new fifth-generation DM-I plug-in hybrid technology was released, and the new product cycle for Dynasty and Ocean began on May 10. BYD released Ocean Auto's new product, the Sea Lion 07EV, to position the mid-tier SUV market. On May 28, BYD Auto released the fifth-generation DM-i plug-in hybrid technology, reducing power loss fuel consumption to 2.9 L/100 km, engine thermal efficiency of 46.06%, and achieving a comprehensive battery life of 2,100 km. It also unveiled the Dynasty Qin L and Ocean Seal 06 series new energy vehicles equipped with the latest generation DM-i plug-in hybrid technology.
Overseas markets continued to expand, and progress in global layout accelerated BYD's overseas passenger car sales of 37,500 units in May, up +267.5%/-8.6% month-on-month, respectively. In January-May, the cumulative sales volume of overseas passenger cars reached 176,400 units, or +176.8%/+27.0% year-on-month, respectively. On May 15, BYD's first pickup truck, the SHARK, debuted in Mexico. On May 21, BYD launched a pure electric double-decker bus in London. On May 28, BYD opened its first store in Saudi Arabia, showing the continuous expansion of BYD in overseas markets.
Profit forecasting and investment rating companies' overseas expansion accelerated, and a new car cycle began. We expect the company's future revenue and other performance indicators to continue to improve, and we are optimistic about the company's future development. The company's overseas expansion and high-end development are expected to accelerate. The company is expected to achieve business revenue of 7,859, 9,165, and 10,37.2 billion yuan in 2024-2026, with year-on-year growth rates of 30%, 17%, and 13%; realized net profit to mother of 370.1, 470.7, and 58.68 billion yuan, with year-on-year growth rates of 23%, 27%, and 25%; EPS of 12.7, 16.2, 20.2 yuan, and PE valuations corresponding to current stock prices are 19, 15, and 12 times, respectively. In view of the launch of the company's new product cycle and the acceleration of overseas expansion, the “buy” rating was maintained.
Risks suggest that the growth rate of automobile (NEV) sales falls short of expectations; competition in the NEV industry intensifies risks; the new vehicle development process falls short of expectations; competition in market segments increases risks; and the progress of intelligent development falls short of expectations.