In the first three quarters of 2024, the company's revenue was 502.25 billion yuan, up 18.9% year on year; after deducting non-return mother 23.19 billion yuan, the year-on-year increase was 19.9%. The performance was in line with expectations. We are optimistic that with its strong technical advantages and cost advantages, BYD can guarantee a steady increase in market share and performance in the fierce industry competition, raising the target price to HK$340.0, corresponding to the predicted price-earnings ratio of 18.6 times over 25 years. There is room for 21% increase from the current price, and the purchase rating.

Report summary

Third-quarter results were in line with expectations. In the first three quarters of 2024, the company's revenue was 502.25 billion yuan, up 18.9% year on year; net profit to mother was 25.24 billion yuan, up 18.1% year on year; after deducting non-return to mother 23.19 billion yuan, up 19.9% year on year.

The company's revenue for the third quarter of 2024 was 201.12 billion yuan, up 24.0% year on year, up 14.2% month on month; net profit to mother was 11.61 billion yuan, up 11.5% year on year, up 28.1% month on month; net profit after deducting non-net profit was 10.88 billion yuan, up 12.7% year on year and 27.0% month on month.

In the third quarter, bicycle revenue increased, and profitability increased. In the third quarter of 2024, sales volume was 1.135 million vehicles, up 37.7% year on year and 15.0% month on month. Bike revenue was 0.139 million yuan, up 0.003 million yuan from month to month. The increase in bicycle revenue was mainly due to the increase in sales of the DM 5.0 model. The overall gross profit margin for the third quarter of 2024 was 21.9%, down 0.2 percentage points year on year, up 3.2 percentage points from month to month; the gross profit margin of the automobile business was 25.6%, down 0.1 percentage points year on year, up 3.2 percentage points from month to month. The increase in gross margin was mainly due to 1) the optimization of the sales structure, and the increase in sales share of DM 5.0; 2) the price of lithium carbonate as a raw material declined in the third quarter; 3) the expansion of large-scale advantages and a slight decline in bicycle depreciation and amortization accruals.

Sales of the DM5.0 model are booming, and it is in a strong new car cycle. In May 2024, after the company officially released the fifth-generation DM technology, it gradually upgraded its main models such as the Qin L, Seal 06, Song L, Song Plus, Han, and Sea Lion to DM 5.0. We believe that new cars built on the new platform will continue to be popular, driving further sales growth. Combined with the stimulus of the country's trade-in policy, it is expected that in Q4, BYD's production and sales will continue to reach new highs.

Investment advice. We are optimistic that with its strong technical advantages and cost advantages, BYD can guarantee a steady increase in market share and performance in the fierce industry competition. Based on this, we raised our target price to HK$340.0, corresponding to the predicted price-earnings ratio of 18.6 times over 25 years. There is room for 21% increase from the current price, and we maintain our buying rating.

Risk warning: industry competition intensifies; prices fall short of expectations