BYD(002594)：BETTER-THAN-EXPECTED Q3 PERFORMANCE LIKELY FROM MORE SINGLE-VEHICLE PROFITS BY SCALE EFFECTS

机构：兴业证券
研究员：DAI Chang/DONG Xiaobin

　　Company Profile BYD Company Limited specializes in car-making. The group also develops manufacturing and marketing of rechargeable batteries and mobile telephone components activity.
　　Net sales break down by family of products and services as follows: -electric vehicles （53.4%）； -mobile telephone components （38.7%）： housings, keypads, LCD modules, lenses, flexible circuit boards, chargers, etc. The group also provides assembly services; -rechargeable batteries （7.6%）： lithium-ion batteries and nickel batteries primarily for mobile telephones, digital cameras, tools and electric toys; -other （0.3%）。
　　China/Hong Kong/Macau/Taiwan account for 61.5% of net sales.
　　（Source: MarketWatch）
　　Event
　　BYD Company Limited （“BYD”/ the company） announced its third-quarter earnings forecast of 2022.
　　In Q3 alone, BYD expects its net income attributable to shareholders to have soared by 333.60% to 365.11% from a year earlier to between CNY 5.51 billion and CNY 5.91 billion; its net income deducting one-off items likely rose by 879.37% to 1014.57% from the same period last year to between CNY 5.07 billion to CNY 5.77 billion.
　　BYD expects a net income attributable to shareholders of CNY 9.1 billion and CNY 9.5 billion in the first three quarters, a gain of between 272.48% and 288.85% from a year ago; its net income deducting one-off items likely climbed by 813.80% to 892.77% from a year prior to between CNY 8.10 billion and CNY 8.80 billion.
　　Comments
　　The better-than-expected Q3 performance was mainly thanks to scale effects which pushed up profits from a single vehicle.
　　In Q3, the company’s net income attributable to shareholders is expected to reach CNY 5.51 billion to CNY 5.91 billion, skyrocketing 333.60% to 365.11% from a year earlier, whose median is CNY 5.71 billion, soaring 349.35% year on year （YoY）； it expects its net income deducting one-off items to have jumped by 879.37% to 1014.57% from a year earlier to between CNY 5.07 billion and CNY 5.77 billion, whose median is CNY 5.42 billion, surging 946.97% from a year earlier.
　　The better-than-expected Q3 performance was thanks to scale effects led by sales volume increases in new energy vehicles （NEVs）。
　　In Q3, BYD sold 538, 700 NEVs, up 194.37% from a year earlier. It is expected that profit from a single vehicle reached nearly CNY 10,000. With continuous sales vol. increases of NEVs and further expansion of its production capacity, BYD is expected to top CNY 10,000 in a single vehicle.
　　Multiple vehicles have been showcased Auto Show, and Yuan Plus is expected to become a phenomenal product.
　　On October 17th of 2022, BYD’s Han, Tang and Yuan Plus were showcased in Paris Auto Show, in the meantime, Yuan Plus also came into the market in Nepal.
　　As the first A-level SUV on BYD’s e-platform, Yuan Plus was marketed in February in China with the selling price between CNY 131,800 and CNY 159,800.
　　Yuan Plus was started to presell in Europe in September and the presell price was EUR 38,000 in Germany.
　　In Q3, BYD sold 60,800 Yuan Plus, with 23,100 in Sept.
　　Meanwhile, this product is about to appear in other Asian countries including Japan, Singapore and Thailand, and it is expected to become a phenomenal product on the globe with its electric technologies and high cost performance, facilitating BYD’s global presence.
　　Earnings forecast and investment recommendation
We are rosy about BYD’s comprehensive strengths in the entire industrial chain of NEVs and maintain the “Outperform” rating. 1） The company has taken a dominant position in hybrid vehicles by virtue of the hybrid technology DM-I and QIN/SONG PLUS DM-i/WARSHIP series will likely see a rise in sales volume.
　　As for pure electric vehicles, the continuous launch of new vehicles on the “e” platform will also boost the increase in the company’s market share. 2） The company will begin to supply power batteries to its external clients, with the aggregate installation volume of power batteries and storage batteries for NEVs reaching 68.61GWh in Sept. and 57.49GWh in 2022. 3） BYD is expected to achieve rapid growth after it goes public on the ChiNext market.
　　We revised up our forecasts for its net income attributable to shareholder at CNY 15.00 billion in 2022, CNY 26.74 billion in 2023, and CNY 38.33 billion in 2024. Reiterate　“Outperform”。
　　Potential risks slower-than-expected industry recovery; less-than-expected sales volume of new vehicles; magnified chip crunch