Incident: On October 30, 2024, the company released its report for the third quarter of 2024. 3Q2024 achieved operating income of 201.125 billion yuan, a year-on-year increase of 24.04%, achieved net profit due to mother of 11.607 billion yuan, an increase of 11.47% over the previous year, and realized net profit without deduction of 10.877 billion yuan, a year-on-year increase of 12.67%.

Gross profit increased year-on-year: 3Q2024's gross profit margin was 22.12%, +0.23pct; 3Q24 sales expense ratio was 4.77%, +0.83pct year over year, mainly due to increased advertising and exhibition fees and depreciation and amortization; management expenses ratio 2.34%, +0.21pct year on year; R&D expenses rate 6.81%, -0.04pct year on year; financial expenses ratio 0.48%, +0.58pct year on year, mainly due to changes in exchange rate changes affecting exchange profit and loss.

Actively promoting the overseas localization production process, the increase in executive holdings shows confidence: the first phase of BYD's Uzbekistan plant plans to produce two best-selling plug-in hybrid models, the Song Plus DMi Champion Edition and the Destroyer 05 Championship Edition, respectively. The first phase is expected to have an annual production capacity of 0.05 million units to meet the sales needs of the Central Asian market. Also, on July 4, BYD held the completion ceremony of the Thai factory and the launch ceremony for the 8 million new energy vehicle in Rayong Province, Thailand. The BYD Thai plant only took 16 months from start to production, with an annual production capacity of about 0.15 million vehicles, including four major process and parts plants for the entire vehicle. At the same time, BYD also became the first car company in the world to close the 8,000th NEV, and Dolphin was unveiled at the Thai factory as an off-line model. Based on confidence in the future development of the new energy industry and the company's future development under the country's “dual carbon” goal, company executives increased their holdings of the company's A shares by 142,000 shares, totaling 35.45 million yuan.

Investment advice: We expect the company to achieve net profit of 38.51/47.29/56.218 billion yuan in 2024-2026. The corresponding PE was 22.69/18.48/15.54 times, respectively, maintaining the “gain” rating.

Risk warning: risk of raw material price fluctuations; risk of industry competition increasing risk; risk of overseas expansion falling short of expectations.