The company's recent situation
The company sold 0.342 million vehicles in June, +35.0% year over year and +3.0% month on month.
reviews
Sales continued to rise in June, and the year-on-month growth rate in 2Q was impressive. By brand, the sales volume of the BYD brand in June was 0.325 million vehicles, +35.0% year over month; Tension sold 12,275 units, +11.0% year over year, which was basically the same; the sales volume was 418 units, and Equation Panther sold 2,680 units. By region, 0.027 million vehicles were exported in June, +156.2% year over month, and -28.0% month over month. We believe that the month-on-month decline in exports may be affected by tight shipping, mass production in overseas factories, and adjustments to the export pace; along with overseas regional expansion and new product launches, overseas sales are still expected to maintain month-on-month growth. The 2Q24 company sold a total of 0.987 million vehicles, +40.2% year over year and +57.6% month on month. The year-on-month growth rate was impressive.
The DM5.0 new car cycle begins, complementing the price band of hybrid products and consolidating market share. At the end of May, BYD released the fifth-generation DM technology to further improve battery life and reduce energy consumption. It can achieve the world's lowest energy loss of 2.9 L in the world and a maximum comprehensive battery life of 2,100 km. The first models, the Qin L and Seal 06, are very popular, and we expect steady monthly sales to reach 0.03-0.04 million units. Looking ahead, we believe that the new DM5.0 vehicle cycle will only begin. We expect new models or facelift models such as the Seal/Sea Lion series and the Song and Han family to be launched one after another to fill the price gap of previous hybrid products and build a full price range with DM4.0 products. At the same time, we believe that the DM5.0 model is expected to seize the joint venture market with comprehensive advantages such as price and fuel consumption to further consolidate the company's hybrid market share.
2H24 bicycle revenue and profit prospects are optimistic, and production capacity going overseas accelerates the creation of a second growth curve in the medium to long term.
In the short term, we believe that the company's 2H24 product cycle and inventory cycle are better than 2H23. 2H24 new models from various brands such as BYD, Tense, and Fangchengbao may be intensively launched. Benefiting from the strength of new models, we are optimistic that 3-4Q's sales will continue to grow month-on-month, and bicycle revenue is expected to resume the month-on-month growth trend. Benefiting from the optimization of the product structure and the release of scale effects, we expect bicycle profits to rise every quarter starting in 2Q. Looking ahead to 2025, we believe that the DM5.0 product cycle will continue to drive sales growth. Compared with the “price reduction and increase” of the Honor Edition and Champion Edition in 22/23, we believe that the price reduction and speed of the new model will be relatively moderate, while the increase in overseas sales share, domestic structural optimization, and supplier cost reduction are expected to drive bicycle profits to remain steady next year. Looking ahead to the medium to long term, we believe that the company's leading position in China is stable; with the completion of the Thai factory, production capacity overseas has accelerated. We are optimistic that the company will expand advanced technology, products and industrial chain capabilities overseas to create a second growth curve.
Profit forecasting and valuation
We generally maintain our net profit forecast for 24/25. The current stock price corresponds to A/H shares 24E 17.8/15.6xP/E. Maintaining an outperforming industry rating, we raised the target price of A/H shares 21%/13% to 309 yuan/300 HKD, corresponding to 24E 23x/20x P/E for A/H shares, which has 28%/28% upside compared to the current A/H shares.
risks
Domestic demand fell short of expectations; sales of new models fell short of expectations.