Large-scale, high-end, globalized and intelligent, multiple growth improvements. New energy+ exports are the core driving force for the total growth of passenger cars. The cost reduction and scaling of the market below 0.2 million yuan is a core advantage, which favors industry leaders; in the market above 0.2 million yuan, the joint venture premium is lost, and it accelerates autonomously. We are optimistic about BYD: 1) Scaling:
As an industry leader, the company consolidates its leading position in the domestic market below 0.2 million yuan with DM-i 5.0 technology+cost advantage, and the scale effect has been strengthened; 2) high-end: technology empowers high-end, tenge, hope, and equations go hand in hand; 3) globalization, high export sales increase, and global factory construction accelerates; 4) intelligence: continuous investment in R&D to accelerate pilot implementation. We are optimistic about the large-scale, globalized, high-end, and intelligent company. The time is right for multiple improvements. This report is the second of BYD's in-depth report series, focusing on the company's potential overseas space and strategy.
Overseas factory+self-built fleet+channel layout further enhances the company's overseas competitiveness. 1) Building overseas factories will bring about a double increase in cost efficiency and brand influence, while avoiding some trade friction restrictions. Since September 2022, the company has announced the construction of new energy passenger vehicle factories in five overseas countries, with a total planned annual production capacity of more than one million vehicles to accelerate production capacity exports. Currently, the company's Uzbekistan plant and Thailand plant have been put into operation in January 2024 and July 2024, respectively. The Brazilian plant is expected to be put into operation in 2024H2, and the Indonesian plant and the Hungarian plant are expected to be put into operation around 2026; 2) Self-built car transport fleets will reduce transportation costs, ensure rapid delivery and expansion of overseas markets, and accelerate vehicle exports; 3) Multi-party cooperation broadens sales channels. The company selects dealer cooperation strategies according to local conditions to achieve rapid expansion of the local sales network.
Focusing on Southeast Asia/South America/Central West/Oceania/Western Europe, the company's long-term global offshore space is expected to reach 4.918 million vehicles. 1) Southeast Asia market (12.5% /1.625 million vehicles): The new energy market is the company's largest market. The Thai plant was put into operation in July 2024. The company is expected to accelerate new energy in Southeast Asia, with Thailand as the center; 2) South American market (17.1% /0.563 million vehicles): the new energy market started rapidly, and the company deepened local expansion. With the Brazilian factory starting up 2024H2, the company is expected to open up the South American market with Brazil as the ****e Oceania market (20.5%/ 0.246 million vehicles): The penetration of new energy is accelerated, and Australia has considerable space under zero tariffs; 4) The Central and Western Asia market (29.1% /0.699 million vehicles): The Israeli market has performed well; the Uzbek factory has begun production. The 2023 Yuan Plus Israel sales volume ranked first among all models, surpassing fuel vehicles; 5) Western Europe (4.8% /0.581 million vehicles): The new energy market has entered a stable period, and the company is facing trade friction issues, accelerating channel layout and localized production over the long term The completion and commissioning of the Hungarian factory is expected to circumvent some trade restrictions and further expand the Western European market.
(Note: The numbers in parentheses indicate the estimated future market share and terminal registration volume of the company overseas)
Investment advice: We are optimistic that the company's technology-driven product strength and brand strength will continue to improve, accelerate overseas to become the world's leading NEV company, maintain large-scale, global, high-end, and intelligent resonance, and maintain profit forecasts. The estimated revenue for 2024-2026 is 8,336.0/ 1000.33/1160.38 billion yuan, and net profit to mother is 39.81/51.18/63.61 billion yuan, corresponding to the closing price of 253.06 yuan/share on July 11, 2024. PE is 18/14, respectively /12 times, maintaining the “Recommended” rating.
Risk warning: The risk of a downturn in the car market, falling short of expectations in sales, intensifying industry competition, falling short of expectations when going overseas.