- BYD’s new DM5.0 technology and international growth are expected to drive sales in FY2025F to FY2026F.
- In 3Q 2024, BYD achieved record shipments, capturing 34.4% of China’s new energy vehicle (NEV) market.
- Key risks for BYD include rising competition in China’s NEV market and higher battery material costs.
Chinese electric vehicle (EV) manufacturer BYD Company Ltd (SGX:HYDD) (SEHK:1211) launched its fifth generation of DM (Dual Mode) technology (DM 5.0) and expanded its international presence, giving a positive outlook on the company’s sales in FY2025F to FY2026F.
This year and next, BYD is focusing on premiumisation and exports, while expanding in the low-to-mid-end market with increased plug-in hybrid electric vehicle (PHEV) penetration.
The company is introducing more premium models in its high-end brands, such as Dazen, Fang Cheng Bao, and Yangwang, and implementing new fuel-efficient DM5.0 technology to boost mid-end sales and improve profitability in PHEV models.
3Q 2024 Earnings Highlights
- Sales Growth: In its third quarter (3Q 2024), BYD reported sales of RMB201 billion, up 24% year-over-year (YoY) and 14% quarter-over-quarter (QoQ).
- Record Shipments: The company shipped a record 1.1 million units, capturing 34.4% of China’s new energy vehicle (NEV) market in terms of sales volume.
- Improved Margins: Gross profit margin improved to 21.9%, with vehicle profit margin (VPM) picking up to about 26%, driven by high-end models and overseas sales.
- Profit Raise: Net profit grew 12% YoY and 28% QoQ to RMB11.6 billion, despite higher selling, general, and administrative (SG&A) expenses and increased research and development (R&D) investment.
BYD’s Future Outlook
- Boosting Sales with DM5.0 Technology: BYD has seen production of its PHEV models equipped with DM5.0 technology ramping up in recent months. In 3Q 2024, 61% of BYD’s shipments were PHEV models with further penetration into lower-tier cities and developing countries with limited charging infrastructure.
- Continuation of Overseas Expansion: Despite a 10% QoQ drop in overseas shipments to 94,000 units due to EU tariffs imposed in early July, BYD is introducing new models in Southeast Asia and Latin America. The company is also building seven NEV facilities in Thailand, Brazil, Hungary, Uzbekistan, Morocco, India, and Vietnam.
Key Risks
- Increased Competition and Costs: Rising competition in China’s NEV market and higher battery material costs, such as lithium carbonate, could reduce VPM and NEV delivery growth.
- Regulatory and Expansion Challenges: Regulatory changes, like the EU’s recent tariff increase, and higher distribution and promotion expenses for overseas expansion may impact net profit growth.
While BYD’s strong 3Q 2024 performance and strategic initiatives support a positive outlook, investors should monitor continued NEV delivery growth and stable vehicle profit margins moving forward.
Disclaimer: ProsperUs Manager of Content Hailey Chung doesn’t own shares of any mentioned companies.
Reference
CGSI Note | BYD | Oct 31, 2024
