Summary of BYDE (0285.HK) Conference Call Company Overview - **Company**: BYDE (0285.HK) - **Industry**: Technology and Automotive Key Points and Arguments Revenue Growth Expectations - BYDE's revenue for 2H25 is expected to grow by **35% HoH** due to improved seasonality and the smart driving trend, alongside a new smartphone product cycle [1][2] - The company is expanding into AI data centers, which may diversify its end markets in the long run [1] Market Conditions - The global smartphone shipment increased by **1% YoY** in 1H25, while the China market declined by **6.5% YoY** [1] - BYD's vehicle shipment increased by **33% YoY** in 1H25, with July and August showing slight growth of **0.56% YoY** and **0.15% YoY**, respectively [1] Financial Performance and Projections - Net income estimates for BYDE have been reduced by **11%/24%/26%** for 2025E/26E/27E due to lower revenue and gross margin (GM) expectations [2] - The gross margin is projected to expand to **9.7% by 2027E** from **6.9% in 1H25** [2][6] - Automotive electronics are expected to contribute **25% of total revenue by 2027E**, down from a previous estimate of **29%** [2] R&D and Operational Expenses - R&D expenses are anticipated to grow at a **30% CAGR** to **Rmb8.9bn (US$1.3bn)**, maintaining a ratio of **3.8%** similar to 2022-23 levels [2] - The operating expense (opex) ratio is expected to increase slightly in 2026E/27E due to higher R&D expenses [2] Earnings Revision - The earnings revision reflects a slower end market growth and the time required for the AI data center expansion to offset impacts [2] - Despite the earnings cut, BYDE is expected to achieve a **net income CAGR of +26%** from 2025E to 2027E [6] Valuation and Price Target - The target price has been lowered by **3.5% to HK$53.08**, implying a **2026E P/E of 17.1x** [11] - The new target price reflects a positive view on BYDE's product mix upgrade and is in line with peers [11][15] Risks - Key risks include customer concentration in the automotive business, slower-than-expected ramp-up of automotive products, and increased competition [16] Additional Important Information - BYDE's strategy focuses on leading customers like Apple and expanding product lines, which is expected to drive up dollar content per vehicle [2] - The company is maintaining a **Buy** rating despite the earnings revisions, indicating confidence in its long-term growth strategy [11][19]

Investment Rating - The report maintains a "Buy" rating for BYD with a target price of HKD 491.00 [6][21][19] Core Insights - BYD reported a revenue of CNY 170 billion in 1Q25, reflecting a year-on-year increase of 36% but a quarter-on-quarter decline of 38% due to a shipment of 1 million NEVs, which is a 60% increase year-on-year [1][8] - The gross profit margin (GPM) for BYD in 1Q25 was 20.1%, down 0.6 percentage points year-on-year, indicating ongoing fierce competition in the market [1][8] - Operating profit for BYD was CNY 5.6 billion, a 39% increase year-on-year, while net profit reached CNY 9.2 billion, doubling year-on-year [1][8] Summary by Sections Financial Performance - Revenue for 1Q25 was CNY 170.36 billion, a 36% increase year-on-year but a 38% decrease quarter-on-quarter [8] - Operating profit was CNY 5.6 billion, up 39% year-on-year, while net profit was CNY 9.2 billion, reflecting a 100% increase year-on-year [1][8] - The GPM was 20.1%, down from 20.7% in 1Q24, indicating a decline in profitability due to competitive pressures [1][8] Market Dynamics - The report highlights that BYD continues to benefit from its business scale despite a competitive environment, with sales and marketing expenses growing at a slower pace than revenue [1][4] - Recent government policies tightening smart driving function promotions have affected order volumes across the industry, prompting a shift in focus towards pricing strategies [2][3] Strategic Initiatives - BYD has initiated time-limited promotions with price cuts of 8-17% on select models to stimulate demand [4] - The company aims to improve liquidity through a proposed distribution of bonus shares, increasing the total number of shares from 3,039 million to 9,117 million [5][21]

Core Insights - XPeng Inc. reported a significant increase in vehicle deliveries, with 30,453 Smart EVs delivered in February 2025, representing a 570% year-over-year growth [1][8] - The XPENG MONA M03 has consistently surpassed 15,000 units in deliveries for three consecutive months, while the XPENG P7+ achieved over 30,000 cumulative deliveries within its first three months [2][8] - XPENG's smart driving technology has seen a high user penetration rate, reaching 86% in urban driving, with substantial increases in smart driving mileage and usage during the Spring Festival travel season [3] Delivery Performance - In the first two months of 2025, XPENG delivered a total of 60,803 Smart EVs, reflecting a 375% increase compared to the same period last year [2] - The XPENG P7+ has been identified as a popular model among consumers, with smart driving being a key factor in purchase decisions [2] Technological Advancements - XPENG's smart driving system, XNGP, achieved a user penetration rate of 93.3%, with the longest smart driving mileage recorded at 12,300 kilometers [3] - The company plans to develop and test its Turing AI Smart Driving system for international markets in 2025 [3] Product Launches - The 2025 Edition of the XPENG G6 was launched in February, featuring new designs and enhanced smart technologies [4] Company Overview - XPeng is a leading Chinese Smart EV company focused on technology-driven transformation in the electric vehicle sector, with a mission to enhance the mobility experience for consumers [5] - The company operates manufacturing plants in Zhaoqing and Guangzhou, Guangdong province, and has a global presence with offices in major cities including Beijing, Shanghai, Silicon Valley, San Diego, and Amsterdam [5]