The new product cycle for the BYD DM5.0+E4.0 platform was launched, and new products were launched intensively with multiple models/prices. The competitiveness of the Qin L DM 5.0 has been verified by the market: The Qin L/Seal 06 of the two new models on the BYD DM 5.0 platform gradually increased production from the launch stage. Delivery volume in the 28th week of 2024 (7.8-7.14) exceeded 6800 units/4,500 units respectively. We expect steady sales to exceed 0.05 million/month. Market share reached a new high, domestic substitution accelerated: the DM5.0 platform drove BYD's market share upward. Recently, the domestic market share reached 17.43%, a new high during the year. The market share of competing models from the latest joint venture brand decreased by 1.94 pct from the beginning of 2024, and the process of replacing domestic brands with independent brands accelerated. Looking ahead to the second half of the year, the new DM5.0 product cycle is clear: the company's Song Plus DM-i and Song L DM-i equipped with DM5.0 technology will be released on the same stage at the end of July, and various models such as the Navy Seal DM-i, Song Pro DM-i, Tense, Equation Leopard, Han DM-i, and Tang DM-i are expected to be launched later. In the second half of 2024, BYD is expected to complete the replacement of all DM5.0 products one after another, and a new round of product cycle shock waves will gradually unfold.
Seizing the strategic market for mainstream household SUVs, the new Song series is expected to become a new phenomenal hit. Mainstream SUVs are the most important domestic strategic passenger car segment: BYD Song's mainstream SUV market accounts for half of passenger car sales and is a strategic focus in terms of sales volume/profit in the passenger car segment. Taking June as an example, BYD's market share in the SUV market was only 10.3%, yet its latest market share has reached 17.4%, and there is significant room for improvement in the SUV segment. Within BYD, Song is BYD's main sales of SUVs. In 2023, the total sales volume of the Qin series was 0.482 million. The Song series had peak monthly sales volume of 0.084 million and annual sales volume of 0.64 million, accounting for about 20% of all BYD sales. Judging from historical sales performance, Song's sales continued to be steadily higher than that of the Qin series. The Song DM 5.0 replacement is expected to be a hit: The new Song L DM-i and Song Plus DM-i are expected to be released on July 25. They are all equipped with DM-i5.0 technology in terms of power, which is better than the original car's power loss, fuel consumption and battery life. Under the impact of the Song DM 5.0 launch, all models in the pure electric/hybrid/fuel segment will experience some autonomous/joint venture sales. It is expected that in 2024, the average monthly sales volume of competitive models from autonomous hybrid/autonomous fuel/autonomous fuel/joint venture brands will be 10.7, 0.082, 0.082. 0.277, 0.149 million vehicles. Assuming market segmentation conversion rates of 5-25%, the average monthly sales volume of the Song family is expected to reach the 0.05-0.1 million vehicle range, with a center of 0.07-0.08 million units/month, which is expected to once again surpass the sales boom of the Qin generation.
Core components are highly self-developed, and the release of production capacity has begun a second wave of growth cycle. In terms of production capacity: At this stage, BYD has a total of 8 production bases nationwide, and the total planned domestic production capacity is about 4.3 million vehicles.
After all phases 1, 2, and 3 of the Hefei base are put into operation, the expected production capacity is 1.32 million vehicles. In 2023, the corresponding total annual sales volume is 0.67 million. Currently, the capacity utilization rate is quite saturated, and product supply is in short supply. The Song DM 5.0 series is expected to be launched at the end of July, and production capacity will be released around August. It is expected that the Zhengzhou base and others will continue to expand, and subsequent sales are expected to begin a second wave of growth. Industrial chain level: The entire industry chain lays out new energy core components, including blade batteries, DM technology, E-platform 3.0, CTB battery body integration, Easy Sifang technology, DiLink intelligent networking systems, advanced intelligent driving assistance systems, etc., and the vertical rate of BYD's supply chain is 70%-80%, and its own industrial system ensures supply chain control.
Looking ahead to the third quarter, models are rising and costs are declining. The profit margin is expected to continue to widen, and there is a clear trend of sharp rise in price. Sales dimensions: BYD's domestic retail sales are expected to be about 3.5601 million vehicles in 2024, and exports are expected to exceed 0.5 million vehicles. In total, BYD's sales volume will reach 4.099 million vehicles in 2024, and the domestic retail market share is about 16.18% in 2024. In 2024, stimulated by policies, exports, new models, etc., the company is expected to sell more than 4 million vehicles in 2024. Profit dimension: ASP is expected to rise steadily along with new vehicle upgrades. Scale effects, bicycle costs, material costs (including batteries), and lithium carbonate prices continue to decline, driving bicycle profits to continue to rise and the profit scissor gap widens. We expect bicycle profits to exceed 10,000 to become a definite trend.
Profit forecast and valuation: In 2024-2026, the company is expected to achieve revenue of 8290.057, 1017.283, 1228.098 billion yuan, and net profit of 40.203, 51.684, and 65.691 billion yuan, giving it a “Highly Recommended” rating.
Risk warning: Sales of new models fall short of expectations; the penetration rate of the new energy market falls short of expectations; the release of multi-brand models in the market has led to increased competition in the industry, etc.