BYD“Han” currently has orders for more than 30,000 vehicles. Our research at BYD stores in Shanghai shows that this round of new models continues to be popular, and that the safety of “blade batteries” has exceeded consumer marketing expectations. Furthermore, “Han” andTeslaHigh-quality supply from industries such as Model 3 and Xiaopeng P7 has jointly opened up the market demand space for pure electric models, which is expected to jointly drive the industry boom in the second half of the year. Maintain the company's A&H stock target price of $94.90/HK$103.50, continue to focus on recommendations, and maintain the “buy” rating.
In-hand orders are plentiful, and the popularity is expected to be highly sustainable. A direct-run store in Shanghai that was surveyed currently has orders of 130-140 “Han” vehicles, while Shanghai's top department stores generally have 100-200 vehicles. The store manager expects the store's current orders to be digested for 3-4 months, and the popularity exceeds the popularity of the previous “Tang DM” models in 2018.
Since a deposit of 10,000 yuan was paid offline, it is expected that there is a high probability that the order will be completed. The monthly sales popularity of “Han” is expected to continue to exceed the previous “Tang DM”, mainly based on: (1) “Han” had such a big impact in an environment with competing products such as Tesla, and “Tang DM” had no competitors when it went on sale; (2) manufacturers already had experience selling popular electric vehicles.
Blade batteries are getting a lot of attention and are attracting young household consumers. “Han” car owners are 25-45 years old, and consumers are younger than “Tang DM” as a whole; in particular, family customers with children are the main ones. This is the same as “Han”
The premium interior and spacious rear space are closely related. The store manager reported that when consumers buy “Han”, what they are most concerned about is the highlights of blade battery safety products (accounting for more than 30% of consumers); the second is technological configuration,sumptuousThe third configuration is that it has a beautiful appearance. Following the launch of the “Tang” pure electric model with blade batteries, consumers are also paying a lot of attention.
With competing Tesla products, they are all excellent suppliers in the industry, creating demand together. Shanghai is Tesla's production base and an important market in China. The Tesla Model 3 has great influence, so Shanghai is also a key market for the launch of new models of BYD's “Han”. The store manager believes that the supply of high-quality industries such as the Tesla Model 3 and Xiaopeng P7 has brought the pure electric consumption cycle forward, and they have jointly explored consumer demand for pure electric vehicles.
The impact of the epidemic has been eliminated, and the improvement in the electric boom in the second half of the year is clear. The sales volume of the surveyed stores for the full year of 2020 set at the beginning of the year is 1,200 units. Although the industry was affected by the epidemic in the first half of the year, the manufacturer raised the store's sales target to 1,600 units during the “Han” warm-up phase in May, which also basically raised the sales target of other directly-managed stores across the country by about 30%. Currently, the surveyed stores have sold 600 vehicles in the first half of the year, which means they need to achieve the sales target of 1,000 vehicles in the second half of the year. In terms of sales, the inventory depth of BYD stores in Shanghai is currently at the level of 2-3 months, maintaining a healthy level; although the first half of the year was affected by the epidemic, no stores were closed in Shanghai.
Risk factors: The company's progress fell short of expectations; the company's NEV production and sales fell short of expectations; NEV policy fluctuations; Cloud Rail's progress fell short of expectations.
Investment advice: Maintain the company's 2020/2021 net profit forecast of 5.2.3/53.2/60.4 billion yuan. The current price of A shares is 85.39 yuan, corresponding to 45/44/39 times PE in 2020/21/22; the price of H shares is HK$74.05, corresponding to 35/34/30 times PE in 2020/21/22. The popularity of the company's new flagship model, the “Han” terminal, is expected to start a new upward cycle of models. The marginal improvements are clear, and the brand power has improved. Recently, the company has completed the restructuring of BYD semiconductors one after another, and the development of new customers is being accelerated by the addition of power batteries. As the spin-off of the company's key businesses accelerates, it is expected that value revaluation will be promoted. We maintain our assessment of the company's value of $259 billion, maintain the company's target price of $94.9/HK$103.5, continue to focus on recommendations, and maintain the company's (A+H shares) “buy” rating.