SPDB International·2025-11-05 12:05Investment Rating - The report maintains a "Buy" rating for BYD, with target prices adjusted to HKD 114.30 for the Hong Kong stock and RMB 117.0 for the A-share, indicating potential upside of 18% and 20% respectively [2][4][6]. Core Insights - BYD's overseas sales are experiencing rapid growth, and profitability is beginning to improve despite a slight year-on-year decline in overall vehicle sales in Q3 [6][8]. - The company has implemented cost control measures that have shown effectiveness, leading to improved per-vehicle profitability in Q4 [6][8]. - The report anticipates continued high growth in overseas vehicle sales, which will enhance profitability [6][8]. Financial Performance and Forecast - Revenue projections for BYD from 2023 to 2027 are as follows: - 2023: RMB 602,315 million - 2024: RMB 777,102 million - 2025E: RMB 804,538 million - 2026E: RMB 876,166 million - 2027E: RMB 974,622 million - The revenue growth rates are projected at 42% for 2023, 29% for 2024, and lower rates thereafter [3][7]. - Gross profit margin is expected to decline from 20.2% in 2023 to 17.9% in 2025E, with net profit projected to reach RMB 34,084 million in 2025E [3][9]. Sales and Profitability - In Q3 2025, BYD's revenue was RMB 194,985 million, a 3% decrease year-on-year, with net profit at RMB 7,823 million, down 33% year-on-year [8]. - The average selling price of vehicles was RMB 141,260, reflecting a 2% decrease compared to the previous year [8]. - The report highlights a significant increase in overseas vehicle sales, which grew by 146% year-on-year [6][8]. Valuation Methodology - The valuation is based on a sum-of-the-parts approach, assigning different price-to-earnings ratios to various segments: - New energy vehicles: 32.0x - Mobile and electronic businesses: 20.7x - Other businesses: 10.0x - The target prices correspond to a 2025E P/E ratio of 27.5x for the Hong Kong stock and 30.9x for the A-share [10].