Sales continued to reach new highs in November, and pure electric sales increased and accelerated month-on-month

BYD released its November production and sales report. In November 2024, BYD achieved sales of 0.504 million new energy passenger vehicles, up 67.2% year-on-year and 0.7% month-on-month. Among them, pure electric sales were 0.198 million units, up 16.4% year on year, up 4.5% month on month; plug-in hybrid sales volume was 0.306 million units, up 133.1% year on year, down 1.6% month on month; overseas sales volume was 0.031 million units, up 1.1% year on year, down 0.7% month on month, and overall sales volume in a single month continued to reach new highs.

DM5.0 enhances model product strength, driving a month-on-month increase in bicycle profitability in the third quarter

In May 2024, the company released fifth-generation DM technology. With leading technologies such as improved engine thermal efficiency, it achieved records such as 2.9 L of lost electricity and fuel consumption of 100 kilometers and a comprehensive battery life of 2,100 km, effectively improving the product power of the new model. In the third quarter of 2024, the DM5.0 model achieved sales volume of 0.283 million units, accounting for 26.5% of the company's domestic sales, an increase of 23.3 pcts over the previous quarter.

After the replacement, the sales price of the model recovered compared to the Honor model. For example, the Qin L increased 0.014-0.02 million yuan compared to the Honor model in the same series, driving the company's bicycle profitability to improve, achieving a gross profit margin of 21.9% in the third quarter, an increase of 3.2 pct over the previous month; the bicycle's net profit was 9,332 yuan, an increase of 752 yuan over the previous month.

High-end and overseas sales continue to gain strength, which is expected to boost medium- to long-term performance

From January to November 2024, the cumulative sales volume of high-end brands was 0.163 million vehicles, up 39.5% year on year, accounting for 4.4% of sales, which remained the same. Overseas sales volume was 0.36 million units, up 74.2% year on year, accounting for 9.6% of sales, up 1.9 pct year on year. Among high-end brands, Tense/ Equation Leopard/ Upward achieved sales of 10,002/8 and 521/302 vehicles respectively in November, with sales volume of -7.2%/+41.4%/+7.1% month-on-month respectively. Among them, the Fangchengbao brand grew faster month-on-month, mainly driven by the launch of Equation Panther 8 on November 12. The Equation Panther 8 is positioned as a medium to large hardcore off-road SUV, and is the first model under BYD to be equipped with Huawei Smart Driving. On the overseas side, the company's overseas production capacity is gradually being implemented. A total of 0.031 million vehicles were sold overseas this month, of which 281.41 million vehicles were exported and 2,836 vehicles were manufactured overseas. Overseas production fell 10.8% from the previous month.

With the rapid growth of the company's high-end models and models sold overseas, it is expected to drive an increase in the company's overall profit level, and performance is expected to be further released.

Investment advice

The company's growth as a global leader in new energy has accelerated, and DM5.0 technology has strongly empowered model product capabilities, driving the company's volume and price to rise sharply. Exports and high-end development are expected to open up revenue and profit margins, and medium- to long-term profit levels are expected to increase. We expect the company's 2024-2026 revenue to be 813.06/952.98/1162.64 billion yuan, respectively, with year-on-year growth rates of 35.0%/17.2%/22.0%, net profit to mother of 39.72/51.11/64.19 billion yuan, year-on-year growth rates of 32.2%/28.7%/25.6%, EPS 13.7/17.6/22.1 yuan/share, respectively, and a 3-year CAGR of 28.8%, maintaining the “buy” rating.

Risk warning: Increased industry competition; risk of price increases for upstream raw materials; increased trade barriers in export destination countries; risk of exchange rate fluctuations.