Goldman Sachs·2025-05-27 02:50Investment Rating - The report assigns a "Buy" rating for BYD Co. with a 12-month price target of Rmb424 for A shares and HK$416 for H shares, indicating an upside potential of 11.3% for A shares and a downside of 2.2% for H shares [11][12]. Core Insights - The impact of BYD's "618" promotions on its sales may be less severe than initially feared, as the price reductions include existing government and OEM trade-in subsidies [2][3]. - The promotion affects 12 models with an average price reduction of Rmb10k, translating to a 9% discount, which could lead to an estimated Rmb2.6 billion impact on BYD's top line, equating to 5% of the projected net profit for 2025 [3][4]. - If competitors follow suit with similar pricing strategies, the potential impact on BYD could escalate to Rmb12.4 billion [4]. Summary by Sections Promotion Impact - BYD's "618" promotions involve discounts on 22 models, primarily priced below Rmb200k, with limited-time pricing until the end of June [1]. - The average blended ASP of the 12 models affected is Rmb114k, and these models accounted for significant portions of BYD's volume, revenue, and gross profit in Q1 2025 [3]. Financial Estimates - Following the promotion announcement, net profit estimates for 2025E-2027E have been reduced by 3%-5%, and target prices have been adjusted downwards by 3% [6]. - The report provides updated revenue forecasts, projecting Rmb777.1 billion for 2025, with a gradual increase to Rmb1.18 trillion by 2027 [11]. Competitive Landscape - The report highlights that traditional OEMs dominate the NEV sales volume mix in the below Rmb200k segment, indicating a competitive pricing environment [5][10]. - BYD's market position is reinforced by its strong competitive moat due to its vertical integration business model, positioning it as a leading global auto OEM [8].