DBS Research reports that BYD (01211.HK) is rapidly expanding its overseas footprint, with international expansion continuing to be a key growth focus for the second half of this year to mitigate margin pressures in the domestic market. For the first three quarters of this year, the group’s overseas sales surged 134% year-on-year to 697,000 units. The report anticipates that exports will increase from 10% in 2024 to over 20% and 30% by 2025 and 2026, respectively.
The report expects that an improvement in revenue composition will drive gross margin enhancement for BYD, supported by effective cost control, which could sustain an average annual compound growth rate of 15% in earnings from 2024 to 2026. Additionally, the firm forecasts that BYD will return to robust growth in 2026 due to a strong product pipeline that will improve the overall product mix.
The firm has lowered its net profit forecasts for BYD in 2025 and 2026 by 13% and 10%, respectively. The target price for the H-share has been reduced from HKD 150 to HKD 140, while the target price for the A-share (002594.SZ) has been adjusted downward from CNY 135 to CNY 130. It maintains a “Buy” rating, anticipating short-term stock price volatility but recommends accumulating on dips. In the medium term, after the initial investment phase for new product launches and overseas expansion concludes, economies of scale and cost efficiencies are expected to materialize.