30 Oct 2026 CMB International Global Markets | Equity Research | Company Update

BYD (1211 HK/002594 CH)

4Q26 could be key for assessing FY27E earnings

Maintain BUY. BYD’s 3Q26 net profit missed our forecast by 12% with several transitional factors. We view 4Q26 margin realization as key for assessing its FY27E earnings trajectory. We also believe BYD’s first-mover global manufacturing footprint could help mitigate trade risks.

•  3Q26 earnings miss on ASP, GPM and impairment. BYD’s 3Q26 revenue expanded 13.6% YoY to RMB221.5bn, trailing our prior forecast by 3.5%. GPM in 3Q26 widened by 0.6ppts YoY but narrowed by 0.9ppts QoQ, lower than our projection by 0.4ppts. SG&A and R&D expensed combined were largely in line. Impairment losses reached RMB1.7bn in 3Q26, or about RMB750mn higher than our projection. Consequently, 3Q26 net profit rose 28.1% YoY to RMB10.0bn, falling RMB1.4bn short of our estimate. Net profit per vehicle rose by 1.8% QoQ to about RMB7,600.
•  4Q26 margin realization serves as a key signal for FY27E profitability. We believe that multiple transitional factors distorted 3Q26 results, including the initial rollouts of a few 2nd-generation blade battery models, forex loss and larger-than-expected impairment losses. Margin impact could be more intangible in 4Q26E when the production of new models ramps up. We view 4Q26 margin execution as a critical signal for assessing FY27E earnings.

 First-mover advantage in European localization. Mass production at its Hungary plant is scheduled for 4Q26, making BYD one of the first Chinese automakers to operate a fully integrated EU manufacturing process encompassing stamping, welding, painting and final assembly. This local footprint provides structural insulation against upcoming EU import quotas and tariff burdens on Chinese hybrid vehicles. BYD’s Brazil plant, operational since 2025, demonstrates strong early execution, with the company currently seeking regulatory permits to double annual capacity to 600,000 units.

 Earnings/Valuation. We cut our FY26E net profit forecast by 5.2% following 3Q26 miss, implying a net profit of RMB11.9bn in 4Q26E. We maintain our FY27E sales volume forecast of 5mn units and trim net profit by 2.2% to RMB42.2bn, assuming lower impairment and forex losses. We maintain our BUY rating but cut H-share target price from HK$125 to HK$109, based on 20x (prior 22x) our revised FY27E EPS to reflect persisting sector headwinds. We cut A-share target price from RMB125 to RMB108 based on YTD AH premium of 17%. Key risks include lower sales volume margins than we expect, as well as a sector de-rating.

Earnings Summary - 1211 HK

(YE 31 Dec) FY24A FY25A FY26E FY27E FY28E Revenue (RMB mn) 777,102 803,965 815,343 898,208 956,051

YoY growth (%) 29.0 3.5 1.4 10.2 6.4 Net profit (RMB mn) 40,254.3 32,619.0 34,229.6 42,243.2 49,140.8

YoY growth (%) 34.0 (19.0) 4.9 23.4 16.3 EPS (Reported) (RMB) 13.85 3.61 3.75 4.63 5.39 P/S (x) 0.7 0.7 0.7 0.6 0.6 P/E (x) 4.2 16.1 15.5 12.6 10.8 Yield (%) 7.1 0.6 1.3 1.6 1.8 ROE (%) 24.8 15.1 13.1 14.3 14.8 Net gearing (%) (50.7) (1.1) (8.8) (16.3) (33.3) Source: Company data, Bloomberg, CMBIGM estimates

China Auto

12-mth Price Performance

Source: FactSet

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Figure 1: Quarterly results

Source: Company data, CMBIGM

Figure 2: Earnings revision

Source: CMBIGM estimates

Figure 3: CMBI estimates vs consensus

Source: Bloomberg, CMBIGM estimates

Financial Summary

INCOME STATEMENT 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Revenue 602,315 777,102 803,965 815,343 898,208 956,051 Cost of goods sold (490,399) (626,047) (661,305) (665,447) (737,160) (784,046) Gross profit 111,916 151,056 142,660 149,896 161,048 172,005 Operating expenses (78,757) (110,677) (117,943) (110,340) (117,567) (122,429) Selling expense (15,371) (24,085) (26,185) (28,674) (29,683) (30,767) Admin expense (13,462) (18,645) (20,200) (20,516) (23,487) (24,384) R&D expense (39,575) (53,195) (57,978) (49,600) (51,200) (53,300) Others (10,350) (14,752) (13,581) (11,550) (13,197) (13,978) Operating profit 33,159 40,379 24,717 39,556 43,482 49,577 Other income 5,965 15,303 14,932 14,600 13,500 12,700 Other expense (1,546) (2,057) (1,564) (800) (1,300) (1,400) Gain/loss on financial assets at FVTPL 258 532 364 1,400 500 550 Investment gain/loss 1,635 2,291 2,857 538 1,058 1,558 Other gains/(losses) (3,677) (5,552) (2,202) (4,900) (3,089) (3,284) EBITDA 82,649 118,681 122,830 136,103 158,515 177,239 Depreciation 37,718 56,922 72,048 81,806 93,468 102,843 Depreciation of ROU assets 1,390 2,643 2,655 2,922 3,327 3,777 Other amortisation 4,444 7,341 5,823 6,421 7,003 7,599 EBIT 39,096 51,774 42,305 44,953 54,716 63,019 Interest income 2,796 2,484 2,437 2,259 2,565 3,318 Interest expense (1,828) (2,094) (2,552) (3,732) (3,039) (2,499) Net Interest income/(expense) 1,475 (1,216) 649 (9,173) (2,474) 819 Foreign exchange gain/loss 639 (1,532) 1,034 (7,700) (2,000) 0

Pre-tax profit 37,269 49,681 39,753 41,221 51,677 60,520 Income tax (5,925) (8,093) (5,992) (6,552) (8,366) (9,798) After tax profit 31,344 41,588 33,761 34,669 43,310 50,721 Minority interest (1,303) (1,334) (1,142) (439) (1,067) (1,581) Net profit 30,041 40,254 32,619 34,230 42,243 49,141 Gross dividends 9,012 12,077 3,264 6,846 8,449 9,828

BALANCE SHEET 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Current assets 302,121 370,572 371,468 388,305 456,424 557,342 Cash & equivalents 108,512 102,257 68,395 86,000 102,546 159,289 Restricted cash 583 482 7,030 4,000 5,000 5,000 Account receivables 67,431 72,749 42,489 46,463 51,973 55,320 Inventories 87,677 116,036 138,421 131,266 141,373 150,365 Prepayment 2,215 3,974 5,025 5,324 5,160 5,488 Financial assets at FVTPL 9,563 40,939 54,533 55,633 85,833 116,083 Other current assets 23,481 32,725 54,411 58,190 62,915 64,069 Contract assets 2,660 1,411 1,165 1,430 1,624 1,729 Non-current assets 377,426 412,784 512,262 523,564 513,323 480,950 PP&E 230,904 262,287 292,776 303,972 288,505 248,664 Right-of-use assets 9,679 10,575 9,083 8,560 8,133 7,256 Deferred income tax 6,584 8,559 15,358 15,358 15,358 15,358 Investment in JVs & assos 17,647 19,082 21,781 23,681 25,281 27,081 Intangibles 37,236 38,424 41,485 43,161 44,675 46,032 Goodwill 4,428 4,428 4,428 4,428 4,428 4,428 Financial assets at FVTPL 2,696 2,655 3,080 3,980 4,380 4,780 Other non-current assets 68,252 66,773 124,271 120,423 122,563 127,351 Total assets 679,548 783,356 883,730 911,869 969,748 1,038,292

Current liabilities 453,667 495,985 468,451 460,130 488,268 518,008 Short-term borrowings 18,323 12,103 38,485 24,714 0 0 Account payables 194,430 241,643 186,742 188,695 212,666 226,192 Tax payable 7,852 10,097 10,716 10,465 11,310 12,029 Other current liabilities 198,363 188,412 181,037 188,855 213,802 226,085 Contract liabilities 34,699 43,730 51,471 47,402 50,490 53,702 Non-current liabilities 75,419 88,682 156,739 162,251 155,741 152,673 Long-term borrowings 11,975 8,258 60,706 55,706 44,706 33,706 Bond payables 0 0 4,998 5,998 6,998 7,998 Other non-current liabilities 63,444 80,425 91,036 100,547 104,037 110,970 Total liabilities 529,086 584,668 625,191 622,381 644,008 670,681

Share capital 2,911 2,909 9,117 9,117 9,117 9,117

Other reserves 135,899 182,342 237,157 268,042 303,358 343,969 Total shareholders equity 138,810 185,251 246,275 277,159 312,476 353,087 Minority interest 11,652 13,437 12,265 12,329 13,264 14,524 Total equity and liabilities 679,548 783,356 883,730 911,869 969,748 1,038,292

CASH FLOW 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec (RMB mn) Operating Profit before taxation 37,269 49,681 39,753 41,221 51,677 60,520 Depreciation & amortization 43,553 66,906 80,526 91,149 103,799 114,220 Change in working capital 91,094 18,291 (57,100) 9,486 23,173 18,201 Others (2,190) (1,424) (4,043) 2,487 (6,188) (5,715) Net cash from operations 169,725 133,454 59,136 144,343 172,461 187,226

Investing Capital expenditure (122,094) (97,360) (156,808) (108,400) (88,800) (77,700) Acquisition of subsidiaries/ investments (16,163) (3,792) (2,998) (1,600) (31,100) (31,100) Net proceeds from disposal of short-term investments

0 129 1,727 0 0 0

Others 12,593 (28,060) (39,385) 2,450 2,450 2,450 Net cash from investing (125,664) (129,082) (197,463) (107,550) (117,450) (106,350)

Financing Dividend paid (3,325) (9,012) (12,077) (3,264) (6,846) (8,449) Net borrowings 18,073 (9,480) 84,783 (11,987) (24,714) (10,000) Proceeds from share issues 0 0 40,075 0 0 0 Others (1,931) 8,225 (8,167) (3,938) (6,905) (5,684) Net cash from financing 12,817 (10,268) 104,614 (19,188) (38,465) (24,133)

Net change in cash Cash at the beginning of the year 51,182 108,512 102,257 68,395 86,000 102,546 Exchange difference 451 (359) (148) 0 0 0 Cash at the end of the year 108,512 102,257 68,395 86,000 102,546 159,289

GROWTH 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Revenue 42.0% 29.0% 3.5% 1.4% 10.2% 6.4% Gross profit 54.9% 35.0% (5.6%) 5.1% 7.4% 6.8% Operating profit 56.0% 21.8% (38.8%) 60.0% 9.9% 14.0% EBITDA 93.3% 43.6% 3.5% 10.8% 16.5% 11.8% EBIT 74.6% 32.4% (18.3%) 6.3% 21.7% 15.2% Net profit 80.7% 34.0% (19.0%) 4.9% 23.4% 16.3%

PROFITABILITY 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Gross profit margin 18.6% 19.4% 17.7% 18.4% 17.9% 18.0% Operating margin 5.5% 5.2% 3.1% 4.9% 4.8% 5.2% EBITDA margin 13.7% 15.3% 15.3% 16.7% 17.6% 18.5% Return on equity (ROE) 24.0% 24.8% 15.1% 13.1% 14.3% 14.8%

GEARING/LIQUIDITY/ACTIVITIES 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

Net debt to equity (x) (0.7) (0.5) (0.0) (0.1) (0.2) (0.3) Current ratio (x) 0.7 0.7 0.8 0.8 0.9 1.1 Receivable turnover days 52.0 45.0 30.9 32.0 33.0 33.0 Inventory turnover days 65.3 67.7 76.4 72.0 70.0 70.0 Payable turnover days 147.7 142.3 115.5 115.0 117.0 117.0

VALUATION 2023A 2024A 2025A 2026E 2027E 2028E

YE 31 Dec

P/E 5.6 4.2 16.1 15.5 12.6 10.8 P/B 1.2 0.9 2.1 1.9 1.7 1.5 P/CFPS 1.0 1.3 8.9 3.7 3.1 2.8 Div yield (%) 5.3 7.1 0.6 1.3 1.6 1.8

Source: Company data, CMBIGM estimates. Note: The calculation of net cash includes financial assets.

Disclosures & Disclaimers

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CMBIGM Ratings

BUY : Stock with potential return of over 15% over next 12 months HOLD : Stock with potential return of +15% to -10% over next 12 months SELL : Stock with potential loss of over 10% over next 12 months NOT RATED : Stock is not rated by CMBIGM

OUTPERFORM : Industry expected to outperform the relevant broad market benchmark over next 12 months MARKET-PERFORM : Industry expected to perform in-line with the relevant broad market benchmark over next 12 months UNDERPERFORM : Industry expected to underperform the relevant broad market benchmark over next 12 months

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