Maintain “Buy” and the TP of HK$300.00. Considering that the price war in the NEV industry is still continuing, we revise downward BYD’s (the "Company") EPS for 2024-2025 to RMB11.94 (-0.71)/ RMB15.31 (-0.55), and the newly added EPS for 2026 is RMB18.93. In the process of industry clearing, the certainty of the leading position has become more outstanding; taking into consideration of the reference to the industry valuation in 2024, we give the Company a PE of 23x in 2024, and maintain "Buy" rating with TP of HK$300.00.
　　Sales performance was in line with expectations. In 2023, the Company achieved revenue of RMB602.315 bn, with a yoy increase of 42.0%; net profit attributable to shareholders reached RMB30.041 bn, a yoy increase of 80.7%; net profit excluding extraordinary profit and loss to shareholders was RMB28.462 bn, a yoy increase of 82.0%. In 1Q2024, net profit attributable to shareholders reached RMB4.569 bn, a yoy increase of 10.6%; net profit excluding extraordinary profit and loss to shareholders was RMB3.752 bn, a yoy increase of 5.24%.
　　Sales volume continued to be strong, with strong profitability. The Company sold 3.024 mn vehicles in 2023, a yoy increase of 61.9%. The Company exported 243,000 NEVs, a yoy increase of 333.9%. In 1Q2024, the Company sold 626,300 vehicles, a yoy increase of 13.4%. Excluding BYD Electronics' revenue contribution, we estimate that the Company's net profit per vehicle in 1Q2024 was around RMB5,000-6,000, witnessed a decline qoq, mainly due to the Company's introduction of end-market sales discounts and lower off-season production capacity utilization. Thanks to factors such as a rich product matrix, good economy of scale and industrial supply chain integration, the Company's overall GPM in 2023 and 1Q2024 recorded 20.21% and 21.88%, respectively.
　　Focusing on high-end brands and overseas markets simultaneously to further enhance the Company’s industry advantages. In 1Q2024, the Company’s Denza, Formula Leopard, Yangwang and other high-end brands achieved sales of 38,500 units, increasing the penetration rate of mid-to-high-end price bands; the export sales of passenger vehicles reached 97,900 units, increasing significantly yoy. The Company’s overseas strategy promoted itself to grow in both sales volume and profitability. The Company released the “Xuanji” Architecture (璇玑架构), and plans to invest RMB100 bn to help build an intelligent vehicle system.
　　Risks: 1) The demand for NEVs may be lower than expected; 2) the price war in the NEV industry may continue to intensify.