SINOLINK SECURITIES·2024-10-31 02:41Investment Rating - The investment rating for BYD is "Buy" with a maintained rating, indicating an expected price increase of over 15% in the next 6-12 months [1][6]. Core Views - The overall performance of BYD is in line with expectations, with a recovery in gross margin attributed to the launch of high-margin DM-i models and cost reductions due to economies of scale [2][3]. - The outlook for Q4 remains strong, with anticipated sales exceeding 130,000 units and continued improvement in gross margins driven by the increasing share of DM-i 5.0 models [2][3]. - The company is solidifying its position in the low-end market while exploring overseas opportunities, with expectations of steady growth in 2025 [2][3]. Summary by Sections Financial Performance - In Q3, BYD sold 1.133 million vehicles, achieving a revenue of 201.13 billion yuan, representing year-on-year growth of 37.8% and quarter-on-quarter growth of 15.3% [1]. - The gross margin for Q3 was 21.9%, with a net profit of 11.61 billion yuan, reflecting a year-on-year increase of 11.5% [1][2]. - Cumulative sales for Q1-Q3 reached 2.74 million units, with a total revenue of 502.25 billion yuan, marking an 18.9% year-on-year increase [1]. Cost and Expenses - Q3 expenses for sales, management, and R&D were 9.6 billion, 4.71 billion, and 13.7 billion yuan respectively, with slight increases in expense ratios [1]. - The average selling price (ASP) per vehicle in Q3 was 139,000 yuan, showing a decrease of 9.4% year-on-year [1]. Future Projections - BYD's revenue is projected to grow significantly, with estimates of 424.06 billion yuan in 2024, 602.32 billion yuan in 2025, and 766.08 billion yuan in 2026, reflecting growth rates of 27.19%, 23.53%, and 14.68% respectively [4]. - The net profit is expected to reach 16.62 billion yuan in 2024, with a growth rate of 29.97%, and continue to rise to 39.04 billion yuan in 2025 [4]. Market Position and Strategy - BYD is expected to maintain its leading position in the market, with a focus on new technology cycles and increasing production efficiency [2][3]. - The company is also looking to expand its market share overseas, where it currently enjoys higher profitability per vehicle compared to the domestic market [2][3].