Key points of investment

It has the ultimate cost performance ratio and has the ability to price in the middle and low end markets

The company has strong pricing capabilities through the layout of hybrid and pure electric models of dynasty networks and marine networks. The company's fifth-generation DM technology is leading the way, achieving the ultimate in low fuel consumption, and the power performance is still outstanding; on the cost side, the company sells millions of vehicles per year, has significant advantages in fixed cost amortization and platform-based diffusion, and has independent control of core components such as the three-power system, and has strong supply chain management capabilities. Several price reductions since 2024 have highlighted the company's strong cost advantage.

Core technology support, with the ability to define high-end market products

The company achieved a complete brand matrix through the layout of cars under brands such as Tense, Fangchengbao, and Yangwang, and relied on core technologies such as Yi Sifang and Yunnian to gradually establish a high-end brand image. Among them, the Tension D9, which has an average price of 0.4 million yuan, sold 0.12 million vehicles in 2023 and won the top sales in the MPV market. The Z9 GT equipped with Eisanfang is expected to consolidate this level of market advantage; looking up to the U8 as a luxury SUV that sells for more than one million yuan, its in-situ rotation and emergency floating functions define luxury, forming a circle-breaking effect, and it took 132 days to complete the delivery of 5,000 units. In addition, two new models, the U9 and U7 models have already been unveiled and will continue to consolidate the company's ultra-high-end market share in the future; in the off-road market Looking up to U8 to lead, Fangchengbao Auto will follow closely and gradually occupy the minds of users.

The overseas layout is gradually being improved, and it is expected to enjoy a broad market and profit flexibility. In May 2021, BYD officially announced the “Passenger Car Going Overseas” program, which will be the first pilot market in Norway. After three years of development, as of May 2024, BYD's new energy passenger vehicles have entered 77 countries and regions, including Brazil, Germany, Japan, and Thailand, and are loved by consumers in many countries and regions. Currently, the company is continuously speeding up the layout of listed models, production bases and channels. From January to May 2024, the company's export sales volume exceeded 0.17 million vehicles, with a year-on-year growth rate of 177%. In the future, with the gradual commissioning of production bases in Thailand, Brazil, Hungary, etc., the company is expected to enjoy a broad overseas market and enjoy higher bicycle profits.

Profit forecasting and valuation

The profit forecast was raised to a “buy” rating. The company is a global leader in trams, building a long-term growth engine for high-end and overseas use. We increased net profit due to mother in 2024-2026 to 39.5 billion, 50.1 billion, and 58.4 billion yuan (37.9 billion, 48.8 billion, and 57.7 billion yuan before the increase), corresponding EPS was 13.57, 17.23, and 20.07 yuan, respectively, and the corresponding PE was 19, 15, and 13 times, respectively. We selected leading companies in the automotive industry and lithium battery companies as comparable companies. The average price-earnings ratio of comparable companies in the industry in 2024-2026 was 21, 15, and 12 times, respectively. Based on the above analysis, we believe that the company's automotive sector has a high technology and cost moat, with bargaining power and high-end brand definition capabilities; the overseas automobile market is booming, and the company layout is leading the industry; the non-automotive sector is expected to accelerate growth. We gave the company a target price-earnings ratio of 25 times for 2024, corresponding target price of 339 yuan, with room for growth of 34%, and raised to a “buy” rating.

Risk warning

Global demand for electric vehicles fell short of expectations, increased industry competition, and the impact of fluctuations in overseas policies.