Core Viewpoint - The company reported strong performance in 1H25, with significant revenue growth and a return to profitability, indicating a positive trend in its operational efficiency and market position [1][2]. Financial Performance - In 1H25, the company achieved revenue of RMB 24.25 billion, a year-on-year increase of 174.0%, and a net profit of RMB 0.3 billion, marking a return to profitability [1]. - In 2Q25, revenue reached RMB 14.23 billion, with a quarter-on-quarter increase of 165.5% and a year-on-year increase of 42.0%, while net profit was RMB 1.6 billion, also showing a turnaround [1]. - The gross margin improved significantly from 1.1% in 1H24 to 14.1% in 1H25, driven by increased sales volume, cost reduction efforts, and product mix optimization [1]. Sales and Product Development - The company sold 221,664 vehicles in 1H25, a year-on-year increase of 155.7%, leading the sales among new force brands in China [1]. - The introduction of new models based on the LEAP 3.5 architecture, including the B10 and B01, and upgrades to existing models on the C platform, have expanded the product matrix [1]. Operational Efficiency - The overall expense ratio decreased by 12.1 percentage points to 16.9% in 1H25, benefiting from rapid revenue growth [1]. - The net cash flow from operating activities reached RMB 2.86 billion, reflecting improved operational efficiency and financial health [1]. Strategic Initiatives - The company is advancing its high-end product strategy and plans to launch new models on the D platform to enter higher-end markets [2]. - In terms of globalization, the company exported 20,375 vehicles in the first half of the year, leading among new force brands, and has established a presence in approximately 30 international markets [2]. - A strategic partnership with Stellantis is progressing, with local assembly projects in Malaysia initiated and plans for a European production base by the end of 2026 [2]. Profit Forecast and Valuation - The company has raised its net profit forecasts for 2025 and 2026 by 70.4% and 50.7%, respectively, indicating a strong outlook for profitability [2]. - The target price has been adjusted upward by 11.5% to HKD 89.20, reflecting a potential upside of 30.9% based on the 2026 P/E valuation method [2].

Investment Rating - The report maintains a "Strong Buy" rating for BYD, expecting it to outperform the benchmark index by over 20% in the next six months [2][15]. Core Views - The report highlights that BYD's sales in July were under pressure due to the off-season, but the company is expected to benefit from its high-end product strategy and global expansion efforts [5][6]. - The report notes a total sales volume of 344,000 units in July, with a year-on-year increase of 1% but a month-on-month decrease of 10% [5]. - The company is focusing on high-end product offerings and expanding its global footprint, with significant growth in overseas sales, which increased by 169% year-on-year [5][6]. Financial Projections - Total revenue is projected to grow from 777.1 billion CNY in 2024 to 1,218.4 billion CNY by 2027, with a compound annual growth rate (CAGR) of approximately 29% [5][6]. - Net profit is expected to rise from 40.3 billion CNY in 2024 to 67.1 billion CNY in 2027, reflecting a CAGR of 34% [5][6]. - Earnings per share (EPS) are forecasted to increase from 4.42 CNY in 2024 to 7.36 CNY in 2027 [5][6]. Sales and Market Performance - The report indicates that BYD's sales volume is expected to reach 5.04 million units in 2025, representing a year-on-year growth of 19% [5][6]. - The company has seen a significant increase in overseas sales, with a total of 81,000 units sold abroad in July, contributing to a cumulative overseas sales figure of approximately 550,000 units from January to July 2025 [5][6]. - The report emphasizes the importance of BYD's high-end product launches and the establishment of manufacturing bases in various countries to support its global strategy [5][6].