CMB International's research report states that BYD Company Limited (01211.HK) exceeded expectations for gross margin in the third quarter of this year, providing confidence for sales in the fourth quarter of the 2024 fiscal year and the 2025 fiscal year. During the period, sales and administrative expenses (SG&A) and research and development comprehensive ratio were 2.2 percentage points higher than expected. Although the growth rate of central subsidies and VAT refunds exceeded expectations, some were offset by forex losses, resulting in BYD Company Limited's net profit in the third quarter being 15% lower than the bank's expectations.

CMB International forecasts that BYD Company Limited's full-year sales volume in the 2025 fiscal year will increase by 13% year-on-year to 4.55 million units, with a gross margin of 20.3% (forecasted gross margin for the 2024 fiscal year is 20.6%). The bank also expects that BYD Company Limited's sales expenses in the 2025 fiscal year will grow in line with revenue, anticipating that its research and development investment expenses will increase to 51 billion RMB (same below).

In addition, CMB International has revised its net profit forecast for BYD Company Limited in the 2024 fiscal year downwards by 0.6% to 36 billion RMB; and upwards by 4% to 47.5 billion RMB in the 2025 fiscal year. It has also raised its H-share target price for BYD Company Limited from 262 Hong Kong dollars to 350 Hong Kong dollars, maintaining a "buy" rating. (js/k)

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