Incident: BYD released its October production and sales report. In October, it sold 0.503 million vehicles, +66.5% over the same period last year.

From January to October 2024, cumulative sales of 3.251 million vehicles were sold, +36.5% year-on-year.

In October, monthly sales exceeded 0.5 million vehicles, setting monthly sales records for Chinese car companies and new energy sales records for global car companies. 1) In October 2024, BYD achieved sales of 0.503 million vehicles, +66.5% YoY/+19.8% YoY; of these, passenger cars sold 0.501 million units and commercial vehicles sold 2,131 units. In October, pure electric passenger cars sold 0.19 million units, +14.6% year on year; plug-in hybrid passenger cars sold 0.311 million units, +129.3% year over year.

From January to October, sales of 3.251 million vehicles were cumulative, +36.5% year-on-year, of which 3.237 million passenger cars were sold. 2) In October, the high-end series Tense+ Yangming+ Equation Bao sold 0.017 million vehicles, accounting for 3.40% of total passenger car sales, -0.42pct. Among them, Tension sold 0.011 million vehicles, -6.25% y/month-on-month +4.68%; Looking forward to selling 282 vehicles, and Equation Panther sold 6026 vehicles.

Globalization is progressing smoothly, with cumulative overseas sales of 0.329 million vehicles from January to October 2024, +86.9% year-on-year.

The company sold 0.031 million passenger cars overseas in October, +2.2% year-on-year; cumulative overseas sales in January-October were 0.329 million vehicles, +86.9% year-on-year. On June 27, the Song PLUS DM-i Champion Edition, the first mass-produced NEV at BYD's Uzbek plant, went offline. The first phase of the plant plans to produce two models, the Song PlusDM-i Champion Edition and the Destroyer 05 Championship Edition. The first phase is expected to produce 0.05 million units per year to meet the sales needs of the Central Asian market. On July 4, BYD's Thailand plant was completed, with an annual production capacity of about 0.15 million vehicles, including four major process and parts factories for complete vehicles. Furthermore, the company has an active presence in markets such as Africa and South America, and we believe that overseas sales are expected to form strong profit support.

A-class SUVs are selling again, and the Sea Lion 05DM-i and the second-generation Song Pro DM-i are on the market, and sales can be expected.

On September 23, the Sea Lion 05DM-i and the second-generation Song Pro DM-i, equipped with BYD's fifth-generation DM technology, were officially launched. The two new models each launched 4 versions, with an official guide price of 0.1128-0.1428 million yuan. Sales flexibility can be expected after product iteration, and the company's profit margin is expected to increase due to scale effects.

High-end models are being planned intensively, and profit margins are expected to increase. On September 20, Tension Motor's “D-class smart luxury flagship GT” Tension Z9GT was officially launched, launching a total of 7 models, including 2 first-run models, with an official guide price of 0.3348 million yuan to -0.4148 million yuan; the D9 can currently maintain monthly sales of around 0.01 million vehicles; the annual sales target for the Tension brand is 0.2 million vehicles. The Fangchengbao 8 is the second model of the Fangchengbao brand. It is positioned as a medium to large SUV, equipped with a DMO plug-in hybrid off-road platform and Yunni-P active hydraulic body control system. It is also BYD's first model equipped with the Huawei Qiancun ADS 3.0 advanced smart driving. It is expected to be launched on November 12; Looking forward will continue to impact the million-level luxury market.

Investment advice: We expect the company's net profit to be 38.13/47.42/55.79 billion in 2024-2026. Corresponding to the current stock price PE is 23/18/16 times, respectively, maintaining a “buy” rating.

Risk warning: Sales of new models fall short of expectations, high-end models fall short of expectations, and increased market competition.