CMB International Securities | Equity Research | Company Update Summary
Core Content
This report provides an update on BYD (002594 CH), focusing on its performance in the third quarter of 2020E, as well as its outlook for the remainder of the year and into 2021E. The analysis includes sales figures, earnings guidance, financial forecasts, and valuation metrics, with a BUY rating and a revised target price of RMB155.7.
Main Points
Sales Performance
- Total auto sales in September 2020E reached 42K units, up 3.6% YoY.
- NEV sales in September 2020E reached 20K units, a 45.3% YoY increase.
- NEPV (New Energy Passenger Vehicles): 19K units, up 42.5% YoY.
- NECV (New Energy Commercial Vehicles): 1.3K units, up 32.8% YoY.
- Model Han delivered 5,612 units in September 2020E, and its sales are expected to rise further in 4Q20E with the ramp-up of blade battery production.
- ICE (Internal Combustion Engine) sales in September 2020E were 22K units, down 17.6% YoY.
Earnings Guidance
- BYD revised its 3Q20E earnings guidance to RMB3.4-3.6bn, up 116-129% YoY.
- This implies net profit in 3Q20E of RMB1.4-1.9bn, up 1352-1519% YoY.
- The full-year revenue forecast was slightly adjusted down by 3% to RMB157bn.
- Full-year net profit forecast was raised by 7% to RMB4.2bn in 2020E, reflecting improved profitability from auto and BYDE business.
Target Price and Rating
- Target Price raised by 37.6% to RMB155.7.
- Current Price is RMB130.5.
- Rating is BUY, with an expected 19.3% upside from current price.
Key Information
Financial Highlights (FY18A–FY22E)
| Metric |
FY18A |
FY19A |
FY20E |
FY21E |
FY22E |
| Revenue (RMB mn) |
130,055 |
127,739 |
156,971 |
201,032 |
269,702 |
| YoY growth (%) |
22.79% |
-1.78% |
22.88% |
28.07% |
34.16% |
| Net Income (RMB mn) |
2,780 |
1,614 |
4,218 |
5,287 |
10,287 |
| EPS (RMB) |
0.93 |
0.50 |
1.45 |
1.84 |
3.67 |
| YoY growth (%) |
-34% |
-47% |
192% |
27% |
100% |
| P/E (x) |
140.07 |
262.44 |
90.03 |
70.87 |
35.52 |
| P/B (x) |
6.45 |
6.27 |
5.80 |
5.31 |
4.53 |
| Net gearing (%) |
64% |
79% |
88% |
80% |
75% |
Earnings Revision (CMBIS vs Consensus)
| Metric |
CMBIS FY20E |
CMBIS FY21E |
Consensus FY20E |
Consensus FY21E |
Diff (%) |
| Revenue (RMB mn) |
156,971 |
201,032 |
143,899 |
169,097 |
9% / 19% |
| Gross Profit (RMB mn) |
26,647 |
32,923 |
22,812 |
26,015 |
17% / 27% |
| Net Profit (RMB mn) |
4,218 |
5,287 |
3,748 |
3,971 |
13% / 33% |
| EPS (RMB) |
1.45 |
1.84 |
1.37 |
1.47 |
6% / 25% |
Revenue Breakdown (FY18A–FY22E)
| Segment |
FY18A |
FY19A |
FY20E |
FY21E |
FY22E |
| Automobiles and Related Products |
76,007 |
63,266 |
62,154 |
82,268 |
119,504 |
| Handset Components and Assembly Services |
42,230 |
53,380 |
81,565 |
101,466 |
117,092 |
| Rechargeable Batteries and Photovoltaic |
8,950 |
10,506 |
12,607 |
14,498 |
16,238 |
| Other business |
2,868 |
587 |
646 |
807 |
969 |
| Total Explicit Revenue |
130,055 |
127,739 |
156,971 |
199,040 |
253,803 |
Valuation Comparison with Major NEV Players (FY21E)
| NEV Company |
Market Cap (US$, mn) |
2021E Sales Est. (US$, mn) |
P/S Multiple FY21E |
| BYD |
31,845 |
7,961 |
4.0 |
| Tesla |
416,192 |
43,094 |
9.7 |
| Nio |
29,450 |
3,887 |
7.6 |
| Li Auto |
16,250 |
2,524 |
6.4 |
| XPENG |
14,430 |
1,952 |
7.4 |
| WM Motor |
N/A |
N/A |
N/A |
Key Ratios
| Ratio |
FY18A |
FY19A |
FY20E |
FY21E |
FY22E |
| Gross Margin (%) |
16% |
16% |
17% |
16% |
17% |
| Net Margin (%) |
2% |
2% |
3% |
3% |
5% |
| ROE (%) |
5% |
3% |
7% |
8% |
14% |
| EPS (RMB) |
0.93 |
0.50 |
1.45 |
1.84 |
3.67 |
| DPS (RMB) |
0.20 |
0.06 |
0.15 |
0.19 |
0.38 |
| BVPS (RMB) |
20.23 |
20.81 |
22.51 |
24.58 |
28.81 |
Conclusion
BYD has shown strong performance in the NEV segment, with rapid growth in NEPV sales and revised upward earnings guidance for 3Q20E and the full year. The company is expected to benefit from the recovery of the NEV market and the introduction of new products, including the blade battery. The target price has been raised, reflecting increased confidence in the company's future performance. The BUY rating is maintained, with a 19.3% upside from the current price. The valuation for the NEV segment is expected to continue to increase due to the high growth potential and strong market position.
