Summary of BYD Co. (002594.SZ/1211.HK) 1Q25 Earnings Review Company Overview - **Company**: BYD Co. (002594.SZ/1211.HK) - **Industry**: Automotive (specifically New Energy Vehicles - NEV) Key Financial Results - **Net Profit**: Rmb9.2 billion in 1Q25, aligning with the pre-announcement range of Rmb8.5 billion to Rmb10 billion [2] - **Sales Volume**: Total sales volume of 1 million units in 1Q25, representing a 60% year-over-year increase but a 34% quarter-over-quarter decrease [5][6] - **Gross Margin**: Reported at 20.1%, a decline of 0.6 percentage points year-over-year, attributed to an average transaction price decline of 11% year-over-year across vehicle models [7][8] - **Operating Margin**: Expected to improve to 4.3% in 2Q25, reflecting continued operating leverage despite lower gross margins [7][8] Market Position and Strategy - **Resilience**: BYD is viewed as one of the most resilient auto OEMs amid macroeconomic uncertainty and competition, supported by a strong pipeline of new models and an industry-leading position [2][6] - **Volume Forecast**: Annual volume forecast remains unchanged at 5.5 million units [2][6] - **New Models**: Eight new vehicle models were unveiled at the 2025 Shanghai Auto Show, including various SUVs and sedans across different brands [5] Competitive Landscape - **Pricing Pressure**: Anticipated gross margin pressure of 3 percentage points quarter-over-quarter into 2Q25 due to intensifying competition [2][7] - **Operating Leverage**: Despite lower gross margins, operating margin showed a year-over-year improvement, indicating effective cost control and scale economics [7][8] Overseas Expansion - **Export Performance**: Monthly exports reached a record high of 73,000 units in March 2025, with significant contributions from Asia Pacific, South America, and Europe [7][8] - **Growth Expectations**: Higher growth is expected from Europe, supported by increased freight capacity and favorable EU policies regarding electric vehicle pricing [7][8] Investment Thesis - **Growth Potential**: BYD is positioned to capture significant market demand both domestically and internationally, with expectations to grow total vehicle sales from 4.3 million in 2024 to 8.9 million by 2030 [9] - **Valuation**: Target prices for A/H shares are set at Rmb436/HK$428, implying an upside of 18%/8% [2][10] - **Risks**: Key risks include intensifying competition in the electric vehicle market, slower-than-expected overseas expansion, and lower-than-expected external battery sales [10] Conclusion - **Rating**: Reiterated Buy rating based on strong sales performance, new supportive policies for the NEV industry, and potential breakthroughs in overseas markets [2][10]