Daiwa Capital Markets Flash: BYD (1211 HK) PDF Free Download
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China
Consumer Discretionary
What’s new: We hosted a post-result NDR call with BYD management on
9 September 2024.
What’s the impact: 4m units sales volume target for 2024. BYD expects
2024 sales volume to hit 4m units (+33% YoY), driven by strong demand
for the DMi5 model seen in the domestic market. This is an upward revision
from its earlier target of 3.6m units (+20% YoY) set earlier this year.
Overseas market guidance is unchanged at 450,000-500,000 units for
2024 vs. 240,000 units in 2023. BYD’s sales volume for August 2024 was
371,000 units, up by 35% YoY. Management sees end-demand as stronger
than August sales volume, and believes the capacity and supply chain are
ready for higher sales volume in 2H24 vs. 1H24. We think monthly sales
volume could likely hit 440,000 units by December 2024, considering
management’s 4m guidance.
Overseas market strategy. YTD, Latin America sales grew the fastest,
followed by APAC and Europe. The introduction of the PHEV model this
year is an important driver for the overseas market. BYD is also expanding
into the Middle East and Africa. For 2025E, the earlier mentioned 1m units
overseas sales target can be a reference, but it will depend on end-demand
in 2H24. By region in 2025, BYD believes Latin America and APAC are
likely to contribute more than the EU. BYD sees the turning point in the EU
market in terms of sales will be when its Hungary factory is ready in late
2025. Currently, the major focus in Europe is to establish a presence. We
are upbeat on BYD’s global expansion story amid the global NEV transition
trend.
Profitability outlook. 2Q24 is the low point of the year due to the impact of
Honor version models, per BYD. From 3Q24, we believe the launch of the
DMi5 model is likely to be gross margin accretive, given its higher ASP. For
example, the Qin L (DMi5) price starts from CNY99,800 vs. Qin Honor’s
price of CNY79,800. We now look for 20% gross margin in 2H24E vs. 19%
in 2Q24.
What we recommend: We raise our 2024-26E EPS by 7-11% as we raise
our sales volume forecasts by 4-7% to 4.0-5.4m units to factor in
management’s sales volume guidance for 2024. We raise SOTP-based TP
to HKD376 from HKD351. We apply an unchanged 12x 2024-25E
EV/EBITDA multiple to the NEV business. Our TP implies a 20x 2025E
target PER. BYD currently trades at 13x 2025E PER, which is attractive in
our view. Key downside risk: lower-than-expected sales volume.
How we differ: Our 2024-26E EPS are 4-10% above the consensus likely
as we are more upbeat on its sales volume outlook.
9 September 2024
NDR takeaways: 4m sales volume target for 2024
➢ BYD expressed a positive view on volume and gross margin in 2H24
➢ Overseas guidance unchanged at 450,000-500,000 units for 2024
➢ Reaffirming our Buy (1) call; raising 12-month TP to HKD376
Source: Daiwa forecasts
Source: FactSet, Daiwa forecasts
BYD (1211 HK)
Target price: HKD376.00(from HKD351.00)
Share price (9 Sep): HKD235.00 | Up/downside: +60.0%
Kelvin Lau
(852) 2848 4467
kelvin.lau@hk.daiwacm.com
Forecast revisions (%)
Year to 31 Dec 24E 25E 26E
Revenue change 5.3 14.1 21.5
Net profit change 7.0 9.5 11.4
Core EPS (FD) change 7.0 9.5 11.4
12-month range 171.70-257.40
Market cap (USDbn) 87.78
3m avg daily turnover (USDm) 173.76
Shares outstanding (m) 2,911
Major shareholder Mr. Wang Chuan-fu (17.6%)
Financial summary (CNY)
Year to 31 Dec 24E 25E 26E
Revenue (m) 741,865 906,626 1,048,177
Operating profit (m) 47,873 57,125 67,239
Net profit (m) 39,331 48,388 56,622
Core EPS (fully-diluted) 13.510 16.622 19.450
EPS change (%) 30.9 23.0 17.0
Daiwa vs Cons. EPS (%) 10.1 7.9 4.4
PER (x) 15.8 12.9 11.0
Dividend yield (%) 1.9 2.3 2.7
DPS 4.053 4.986 5.835
PBR (x) 3.7 3.0 2.5
EV/EBITDA (x) 5.8 4.8 3.2
ROE (%) 25.5 25.8 25.0
2
BYD (1211 HK): 9 September 2024
BYD: SOTP valuation
Multiple (x)
NAV 2024-25E
NAV
(CNY m)
per share
Mobile handset
10 x
122,681
42.1
Auto - NEV
12 x
976,338
335.4
Auto- EV Battery
20 x
28,800
9.9
Sub-total
1,127,818
387.4
- Net debt/cash
117,460
40.3
- Minority interest
(13,311)
(4.6)
Equity value (CNY m)
1,231,967
423.2
Exchange rate, 1HKD = x CNY
0.90
Equity value (HKD mn)
1,368,852
Conglomerate discount
20%
Equity value/share (HKD)
376.00
Source: Daiwa
3
BYD (1211 HK): 9 September 2024
Financial summary
Key assumptions
Profit and loss (CNYm)
Cash flow (CNYm)
Source: FactSet, Daiwa forecasts
Year to 31 Dec 2019 2020 2021 2022 2023 2024E 2025E 2026E
BYD NEV volume (units) 229,506 189,689 603,783 1,863,494 3,024,417 3,966,400 4,814,600 5,414,600
Volume growth - NEV (%) (7.4) (17.3) 218.3 208.6 62.3 31.1 21.4 12.5
BYD NEV ASP (CNY) 111,381 125,861 144,740 165,000 151,200 139,104 146,059 153,362
ASP growth - NEV (%) (12.6) 13.0 15.0 14.0 (8.4) (8.0) 5.0 5.0
Year to 31 Dec 2019 2020 2021 2022 2023 2024E 2025E 2026E
Automobile 55,537 76,958 128,960 315,691 470,853 561,158 712,471 839,487
Mobile handset 52,522 59,354 86,454 98,815 118,577 166,008 179,454 193,990
Other Revenue 13,719 17,157 727 9,554 12,885 14,700 14,700 14,700
Total Revenue 121,778 153,469 216,142 424,061 602,315 741,865 906,626 1,048,177
Other income 2,019 (340) (1,963) (7,796) (8,606) (9,793) (11,242) (10,901)
COGS (103,702) (126,226) (187,998) (351,816) (480,558) (592,209) (726,743) (842,159)
SG&A (14,208) (16,916) (19,783) (43,722) (78,248) (91,991) (111,515) (127,878)
Other op.expenses 0 0 0 0 0 0 0 0
Operating profit 5,887 9,988 6,399 20,727 34,903 47,873 57,125 67,239
Net-interest inc./(exp.) (3,134) (2,909) (1,276) 513 969 197 404 267
Assoc/forex/extraord./others (322) (196) (605) (160) 1,397 2,209 2,209 2,209
Pre-tax profit 2,431 6,883 4,518 21,080 37,269 50,278 59,739 69,715
Tax (312) (869) (551) (3,367) (5,925) (9,289) (9,558) (11,154)
Min. int./pref. div./others (504) (1,780) (922) (1,091) (1,303) (1,659) (1,793) (1,938)
Net profit (reported) 1,614 4,234 3,045 16,622 30,041 39,331 48,388 56,622
Net profit (adjusted) 1,614 4,234 3,045 16,622 30,041 39,331 48,388 56,622
EPS (reported)(CNY) 0.592 1.552 1.080 5.710 10.319 13.510 16.622 19.450
EPS (adjusted)(CNY) 0.592 1.552 1.080 5.710 10.319 13.510 16.622 19.450
EPS (adjusted fully-diluted)(CNY) 0.592 1.552 1.080 5.710 10.319 13.510 16.622 19.450
DPS (CNY) 0.060 0.155 0.105 1.142 3.096 4.053 4.986 5.835
EBIT 5,887 9,988 6,399 20,727 34,903 47,873 57,125 67,239
EBITDA 15,358 22,178 20,064 41,097 78,454 84,344 101,482 119,552
Year to 31 Dec 2019 2020 2021 2022 2023 2024E 2025E 2026E
Profit before tax 2,431 6,883 4,518 21,080 37,269 50,278 59,739 69,715
Depreciation and amortisation 9,471 12,190 13,665 20,370 43,553 36,471 44,356 52,313
Tax paid (445) (449) (254) 0 0 (9,289) (9,558) (11,154)
Change in working capital (5,757) 11,743 41,940 98,418 92,494 72,533 22,996 112,565
Other operational CF items 9,041 15,026 5,598 970 (3,591) (13) (473) (473)
Cash flow from operations 14,741 45,393 65,467 140,838 169,725 149,981 117,059 222,965
Capex (20,627) (11,774) (37,344) (108,030) (124,177) (99,526) (96,479) (98,627)
Net (acquisitions)/disposals (505) (1,268) (1,847) 12,803 22,245 0 0 0
Other investing CF items 251 (1,402) (6,213) (25,370) (23,732) 0 0 0
Cash flow from investing (20,881) (14,444) (45,404) (120,596) (125,664) (99,526) (96,479) (98,627)
Change in debt 7,179 (19,291) (13,006) (16,413) 18,073 (8,600) 0 0
Net share issues/(repurchases) 0 0 0 0 0 0 0 0
Dividends paid (948) (441) (671) 0 0 (9,012) (11,799) (14,516)
Other financing CF items 379 (9,174) 29,740 (3,076) (5,256) (2,196) (1,736) (1,736)
Cash flow from financing 6,610 (28,907) 16,063 (19,489) 12,817 (19,808) (13,535) (16,252)
Forex effect/others 0 0 0 0 0 0 0 0
Change in cash 470 2,041 36,125 753 56,879 30,646 7,046 108,086
Free cash flow (5,886) 33,619 28,123 32,808 45,548 50,455 20,581 124,338
4
BYD (1211 HK): 9 September 2024
Financial summary continued …
Balance sheet (CNYm)
Key ratios (%)
Source: FactSet, Daiwa forecasts
Year to 31 Dec 2019 2020 2021 2022 2023 2024E 2025E 2026E
Cash & short-term investment 11,674 13,738 49,820 51,182 108,512 139,158 146,204 254,290
Inventory 25,572 31,396 43,355 79,107 87,677 108,047 132,593 153,650
Accounts receivable 40,135 39,308 35,593 38,828 61,866 59,349 90,663 83,854
Other current assets 29,586 27,162 37,342 71,685 44,067 46,958 50,372 53,305
Total current assets 106,967 111,605 166,110 240,804 302,121 353,513 419,831 545,099
Fixed assets 55,296 58,202 75,545 176,502 265,630 317,652 359,249 395,596
Goodwill & intangibles 11,954 10,174 10,116 23,289 41,664 52,697 63,222 73,189
Other non-current assets 21,425 21,037 44,009 53,265 70,132 72,342 74,551 76,760
Total assets 195,642 201,017 295,780 493,861 679,548 796,203 916,853 1,090,645
Short-term debt 54,062 27,645 22,939 5,153 18,323 10,323 10,323 10,323
Accounts payable 35,341 49,792 79,044 143,766 198,483 236,884 254,360 328,442
Other current liabilities 18,626 28,994 69,321 184,426 236,860 291,738 356,530 412,195
Total current liabilities 108,029 106,431 171,304 333,345 453,667 538,945 621,214 750,961
Long-term debt 21,916 23,626 10,790 7,594 11,975 11,375 11,375 11,375
Other non-current liabilities 3,095 6,507 9,442 31,533 63,444 63,444 63,444 63,444
Total liabilities 133,040 136,563 191,536 372,471 529,086 613,764 696,032 825,779
Share capital 2,728 2,728 2,911 2,911 2,911 2,911 2,911 2,911
Reserves/R.E./others 54,034 54,146 92,159 108,118 135,899 166,217 202,806 244,912
Shareholders' equity 56,762 56,874 95,070 111,029 138,810 169,129 205,717 247,823
Minority interests 5,839 7,580 9,175 10,361 11,652 13,311 15,104 17,042
Total equity & liabilities 195,642 201,017 295,780 493,861 679,548 796,203 916,853 1,090,645
EV 688,269 661,832 607,365 574,207 532,650 492,853 485,391 377,034
Net debt/(cash) 64,304 37,532 (16,091) (38,436) (78,213) (117,460) (124,505) (232,592)
BVPS (CNY) 20.806 20.847 32.657 38.139 47.682 58.097 70.665 85.129
Year to 31 Dec 2019 2020 2021 2022 2023 2024E 2025E 2026E
Sales (YoY) (0.0) 26.0 40.8 96.2 42.0 23.2 22.2 15.6
EBITDA (YoY) (8.3) 44.4 (9.5) 104.8 90.9 7.5 20.3 17.8
Operating profit (YoY) (21.1) 69.7 (35.9) 223.9 68.4 37.2 19.3 17.7
Net profit (YoY) (41.9) 162.3 (28.1) 445.9 80.7 30.9 23.0 17.0
Core EPS (fully-diluted) (YoY) (41.9) 162.3 (30.4) 428.7 80.7 30.9 23.0 17.0
Gross-profit margin 14.8 17.8 13.0 17.0 20.2 20.2 19.8 19.7
EBITDA margin 12.6 14.5 9.3 9.7 13.0 11.4 11.2 11.4
Operating-profit margin 4.8 6.5 3.0 4.9 5.8 6.5 6.3 6.4
Net profit margin 1.3 2.8 1.4 3.9 5.0 5.3 5.3 5.4
ROAE 2.9 7.5 4.0 16.1 24.0 25.5 25.8 25.0
ROAA 0.8 2.1 1.2 4.2 5.1 5.3 5.6 5.6
ROCE 4.5 7.9 5.0 15.2 22.2 24.9 25.6 25.4
ROIC 4.3 7.6 5.9 20.4 37.8 56.9 59.5 87.8
Net debt to equity 113.3 66.0 net cash net cash net cash net cash net cash net cash
Effective tax rate 12.8 12.6 12.2 16.0 15.9 18.5 16.0 16.0
Accounts receivable (days) 126.4 94.5 63.2 32.0 30.5 29.8 30.2 30.4
Current ratio (x) 1.0 1.0 1.0 0.7 0.7 0.7 0.7 0.7
Net interest cover (x) 1.9 3.4 5.0 n.a. n.a. n.a. n.a. n.a.
Net dividend payout 10.1 10.0 9.7 20.0 30.0 30.0 30.0 30.0
Free cash flow yield n.a. 5.4 4.5 5.3 7.3 8.1 3.3 20.0
Company profile
Listed in Hong Kong in 2002, BYD is engaged in the R&D, manufacture and distribution of automobiles,
rechargeable batteries and mobile phone components. It owns 65% of BYD Electronics (285 HK, Not
rated). BYD focuses on autos (especially NEVs), rechargeable batteries (lithium-ion and nickel batteries
used in mobile phones and other portable electronic devices), as well as mobile-phone components and
its mobile phones assembly business (casings, keypads, mobile-phone designs, etc.).
5
BYD (1211 HK): 9 September 2024
ESG analysis
Source: Daiwa, Company
ESG opportunities
Opportunities Management Analyst comments
EGreen technology 1
Continuous breakthroughs in technology allow BYD to deliver more environmentally-friendly,
high-performance products, such as its DM-i model. Fuel consumption for the DM-i is 4L/100km
vs. 7L/100km for ICEs. We expect strong demand for its DM-i model, leading to strong YoY
growth in BYD's auto sales going forward.
ESG risks
Risks Management Analyst comments
G
Executive/board
quality 2BYD’s board has 6 directors, 3 of whom are independent. Among the directors, Mr. Chuanfu
Wang also serves as the company's CEO.
Capital management 2 BYD paid a dividend of CNY3.1 per share in 2023, representing a dividend payout ratio of 30%.
Related party &
transaction 2Sales to related parties accounted for 0.4% of total 2023 revenue, while purchases from related
parties constituted 3% of the cost of sales.
SProduct quality &
safety 1
BYD was one of the first vehicle manufacturers to implement a 'quality system competitiveness
index' and to create the role of development quality engineers to monitor the quality of its
products.
SProduct design &
lifecycle management 2The company has a strong product design capacity given the high level of fuel efficacy of its DMi
PHEV models (close to 4L/100) and the innovative development of its blade LFP batteries.
EMaterials sourcing &
efficiency 2
BYD sources key components and parts from industry-leading suppliers. It has also formed a
'green supplier, green material' system to ensure that external sources meet its environmental
standards. For its battery business, BYD has its own cathode capacity, which we believe helps
improve its operational efficiency.
Note: Management score represents a company's ability to
manage/benefit from
certain
ESG
topics. The scores range
from 1
to
3,
with
1
being the strongest.
Last update: 19 Jun 2024
6
BYD (1211 HK): 9 September 2024
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DSCL’s materials are distributed by DCME only as permitted by law. The materials are not directed to, or intended for distribution to or use by, any person or entity located in any jurisdiction where
7
BYD (1211 HK): 9 September 2024
such distribution, publication, availability or use would be contrary to law or regulation or would subject DCME to any regulation or licensing requirement within such jurisdiction.
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Research reports are produced by Daiwa Securities Co. Ltd. and/or its affiliates and are distributed by Daiwa Capital Markets Deutschland GmbH in the European Union. Daiwa Capital Markets
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DCMA Market Making
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Research Analyst Conflicts
For updates on “Research Analyst Conflicts” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. The principal research analysts who prepared this
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For updates on “Research Analyst Certification” and “Rating System” please visit BlueMatrix disclosure link at https://daiwa3.bluematrix.com/sellside/Disclosures.action. The views about any and
all of the subject securities and issuers expressed in this Research Report accurately reflect the personal views of the research analyst(s) primarily responsible for this report (or the views of the
firm producing the report if no individual analyst is named on the report); and no part of the compensation of such analyst (or no part of the compensation of the firm if no individual analyst is named
on the report) was, is, or will be directly or indirectly related to the specific recommendations or views contained in this Research Report.
The following explains the rating system in the report as compared to relevant local indices, unless otherwise stated, based on the beliefs of the author of the report.
"1": the security could outperform the local index by more than 15% over the next 12 months.
"2": the security is expected to outperform the local index by 5-15% over the next 12 months.
"3": the security is expected to perform within 5% of the local index (better or worse) over the next 12 months.
"4": the security is expected to underperform the local index by 5-15% over the next 12 months.
"5": the security could underperform the local index by more than 15% over the next 12 months.
Disclosure of investment ratings
Rating
Percentage of total
Buy*
74.13%
Hold**
19.13%
Sell***
6.74%
Source: Daiwa
Notes: data is for single-branded Daiwa research in Asia (ex Japan) and correct as of 30 June 2024.
* comprised of Daiwa’s Buy and Outperform ratings.
** comprised of Daiwa’s Hold ratings.
*** comprised of Daiwa’s Underperform and Sell ratings.
Additional information may be available upon request.
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