SPDB International·2025-09-09 11:15Investment Rating - The report maintains a "Buy" rating for BYD, indicating a positive outlook for the company's performance moving forward [8]. Core Views - The report suggests that BYD has passed its most challenging period this year, with expectations of a stabilizing trend in the second and third quarters [8]. - Strong overseas vehicle sales are anticipated to contribute significantly to profit growth [8]. - The company is effectively controlling costs, which is reflected in its financial metrics [8]. Financial Projections - Revenue is projected to grow from RMB 602,315 million in 2023 to RMB 1,092,599 million by 2027, with a compound annual growth rate (CAGR) of 13% [3]. - Net profit is expected to increase from RMB 30,041 million in 2023 to RMB 46,205 million in 2027, with a notable growth rate of 81% in 2023 [3]. - The gross margin is forecasted to decline slightly from 20.2% in 2023 to 17.0% in 2027, indicating potential pressure on profitability [3]. Valuation - The target price for BYD shares is set at HKD 121.0 for the Hong Kong stock and RMB 124.5 for the A-share, representing potential upside of 15% and 16% respectively [4][5]. - The valuation employs a sum-of-the-parts approach, assigning price-to-earnings ratios of 32.0x for the electric vehicle segment, 21.3x for mobile and electronic businesses, and 10.0x for other segments [12]. Performance Review - In Q2 2025, BYD's revenue reached RMB 200,921 million, a 14% increase year-on-year, while net profit was RMB 6,356 million, reflecting a 30% decline compared to the previous year [10]. - The company sold 1,145,150 vehicles in Q2 2025, marking a 16% increase year-on-year, although the average profit per vehicle decreased significantly [10]. Adjustments to Forecasts - The revenue and profit forecasts for 2025 and 2026 have been adjusted downward, with expected revenues of RMB 836,877 million and RMB 969,073 million respectively, reflecting a 6% and 8% reduction from previous estimates [11]. - The new projections indicate a decrease in net profit expectations for 2025 to RMB 35,927 million, down 28% from earlier forecasts [11].