BYD（1211 HK/002594 CH)

Cash flow dent from shortening payable days may be over. BYD's operating cash flow of RMB59bn in FY25 hit its lowest level since FY21 due to shortened payable days. Its net cash at the end of FY25 was narrowed by about RMB62bn YoY. We estimate that BYD's interest expense and receivable discounts rose by almost RMB1.3bn YoY in FY25, dragging down its net profit by about 4%. We are of the view that such dent is short-lived, should BYD be able to keep its current payable days.

Overseas sales could be a positive surprise in FY26

4Q25 earnings miss on GPM, finance cost. BYD's 4Q25 revenue was largely in line with our forecast while GPM narrowed by 0.2ppts QoQ, or 0.6ppts lower than our projection. Such miss was offset by its stringent R&D expenses. On the other hand, BYD's finance cost (incl.forex loss) and government grants in 4Q25 were both below our prior expectation, leading to a net profit miss of 18% in 4Q25. Net profit per vehicle was about RMB6,900 in 4Q25, about RMB100 lower than that in 3Q25.

Maintain BUY. Despite its 4Q25 earnings miss, we are of the view that the cash dent from shortening payable days could be over now and BYD could be one of the biggest beneficiaries from rising oil price in its overseas markets. We believe BYD's previous high earnings quality and industry-leading technologies could also lay foundation for its net profit growth in FY26-27E.

Overseas markets, energy storage to lift profit. We maintain our FY26E sales volume forecast of 5mn units, with overseas markets contributing 1.5mn units (implying 1% YoY decline for domestic sales volume). We believe BYD could be one of the biggest beneficiaries from rising oil price amid the current geopolitical tension, not only for its overseas NEV sales, but also photovoltaic and energy storage battery sales. We thus project its revenue to rise 9%/8% YoY and GPM to be largely flat at 17.8% in FY26- 27E.

Earnings/Valuation. It appears to us that BYD has been more prudent on R&D expenses with only 9% YoY growth and 8.6% capitalization ratio in FY25 (vs. 1.8% in FY24). We expect R&D expenses to rise 3%/2% YoY in FY26-27E. We also expect government grants in FY26-27E to be at a similar level as FY25, given the continuously rising deferred income balance. Accordingly, we project BYD's net profit to rise 11%/21% YoY to RMB36.3bn/43.8bn in FY26-27E. We maintain our BUY rating and A/H share target price of HK$125/RMB125, based on 23x (prior 20x) our FY27E P/E, to reflect its brighter overseas outlook. Key risks include lower sales volume or margins than we expect, and a sector de-rating.

Earnings Summary - 1211 HK

(YE 31 Dec)

FY23A

FY24A

FY25A

FY26E

FY27E

Revenue (RMB mn)

602,315

777,102

803,965

872,654

945,030

YoY growth(%)

42.0

29.0

3.5

8.5

8.3

Net profit (RMB mn)

30,040.8

40,254.3

32,619.0

36,305.4

43,828.3

YoY growth(%)

80.7

34.0

(19.0)

11.3

20.7

EPS(Reported)(RMB)

10.34

13.85

3.61

3.98

4.81

P/S(x)

1.4

1.1

1.1

1.0

0.9

P/E(x)

9.1

6.8

26.0

23.6

19.5

Yield(%)

3.3

4.4

0.4

0.8

1.0

ROE(%)

24.0

24.8

15.1

13.8

14.7

Net gearing(%)

(69.5)

(50.7)

(1.1)

(12.3)

(21.0)

Source: Company data, Bloomberg, CMBIGM estimates

1211 HK 002594 CH

BUY BUY

Maintain Maintain

TPHK$125.00 RMB125.00

Prior TP HK$125.00 RMB125.00

Up/Downside 17.4% 18.7%

Current Price HK$106.5 RMB105.3

China Auto

Ji SHI, CFA

(852) 37618728

shiji@cmbi.com.hk

Wenjing DOU, CFA

(852) 6939 4751

douwenjing@cmbi.com.hk

Austin Liang

(852) 3900 0856

austinliang@cmbi.com.hk

12-mth Price Performance



Source: FactSet

Stock Performance

1211 HK

002594 CH

Abs.

Rel.

Abs.

Rel.

1-mth

12.2%

19.7%

17.9%

17.3%

3-mth

13.8%

17.7%

5.3%

17.7%

6-mth

0.0%

4.7%

-1.9%

1.1%

Source: FactSet

Stock Data

(LC)

1211 HK

002594 CH

Mkt Cap(mn)

970981.5

960040.9

Avg 3 mths t/o(mn)

2792.02

5117.37

52w High

155.07

135

52w Low

90

87.05

Issued Shares(mn)

9117.207

9117.207

Source: FactSet


Figure 1: Quarterly results

RMB mn

1Q24

2Q24

3Q24

4Q24

1Q25

2Q25

3Q25

4Q25

YoY

QoQ

Sales volume (units)

626,263

986,720

1,134,892

1,524,270

1,000,804

1,145,150

1,114,192

1,342,290

-11.9%

20.5%

Revenue

124,944

176,182

201,125

274,851

170,360

200,921

194,985

237,699

-13.5%

21.9%

Gross profit

25,870

30,680

40,470

54,036

34,185

32,681

34,346

41,448

-23.3%

20.7%

R&D expenses

(10,611)

(9,010)

(13,698)

(19,876)

(14,223)

(15,373)

(14,152)

(14,230)

-28.4%

0.5%

SG&A expenses

(9,101)

(9,194)

(10,757)

(13,678)

(11,087)

(11,710)

(10,979)

(12,608)

-7.8%

14.8%

Operating profit

5,798

11,525

14,423

18,739

11,021

7,699

10,186

11,279

-39.8%

10.7%

Net profit

4,569

9,062

11,607

15,016

9,155

6,356

7,823

9,286

-38.2%

18.7%

Gross margin

20.7%

17.4%

20.1%

19.7%

20.1%

16.3%

17.6%

17.4%

-2.2 ppts

-0.2 ppts

Operating margin

4.6%

6.5%

7.2%

6.8%

6.5%

3.8%

5.2%

4.7%

-2.1 ppts

-0.5 ppts

Net margin

3.7%

5.1%

5.8%

5.5%

5.4%

3.2%

4.0%

3.9%

-1.6 ppts

-0.1 ppts

Source: Company data, CMBIGM

Figure 2: Earnings revision

New

Old

Diff(%)

RMB mn

FY25A

FY26E

FY27E

FY25E

FY26E

FY27E

FY25A

FY26E

FY27E

Revenue

803,965

872,654

945,030

810,263

877,372

956,240

-0.8%

-0.5%

-1.2%

Gross profit

142,660

155,061

167,871

145,197

157,754

171,361

-1.7%

-1.7%

-2.0%

Operating profit

40,185

45,152

54,508

43,007

46,959

57,087

-6.6%

-3.8%

-4.5%

Net profit

32,619

36,305

43,828

34,697

38,061

46,422

-6.0%

-4.6%

-5.6%

Gross margin

17.7%

17.8%

17.8%

17.9%

18.0%

17.9%

-0.2 ppts

-0.2 ppts

-0.2 ppts

Operating margin

5.0%

5.2%

5.8%

5.3%

5.4%

6.0%

-0.3 ppts

-0.2 ppts

-0.2 ppts

Net margin

4.1%

4.2%

4.6%

4.3%

4.3%

4.9%

-0.2 ppts

-0.2 ppts

-0.2 ppts

Source: CMBIGM estimates

Figure 3: CMBI estimates vs consensus

CMBIGM

Consensus

Diff(%)

RMB mn

FY25A

FY26E

FY27E

FY25E

FY26E

FY27E

FY25A

FY26E

FY27E

Revenue

803,965

872,654

945,030

836,875

959,034

1,086,653

-3.9%

-9.0%

-13.0%

Gross profit

142,660

155,061

167,871

150,930

177,949

206,660

-5.5%

-12.9%

-18.8%

Operating profit

40,185

45,152

54,508

37,696

49,664

61,048

6.6%

-9.1%

-10.7%

Net profit

32,619

36,305

43,828

35,543

44,828

54,715

-8.2%

-19.0%

-19.9%

Gross margin

17.7%

17.8%

17.8%

18.0%

18.6%

19.0%

-0.3ppts

-0.8ppts

-1.3ppts

Operating margin

5.0%

5.2%

5.8%

4.5%

5.2%

5.6%

0.5ppts

0.0ppts

0.1ppts

Net margin

4.1%

4.2%

4.6%

4.2%

4.7%

5.0%

-0.2ppts

-0.5ppts

-0.4ppts

Source: Bloomberg, CMBIGM estimates


Financial Summary

INCOME STATEMENT

2022A

2023A

2024A

2025A

2026E

2027E

YE 31 Dec (RMB mn)

Revenue

424,061

602,315

777,102

803,965

872,654

945,030

Cost of goods sold

(351,816)

(490,399)

(626,047)

(661,305)

(717,594)

(777,159)

Gross profit

72,245

111,916

151,056

142,660

155,061

167,871

Operating expenses

(50,990)

(78,757)

(110,677)

(117,943)

(124,345)

(129,950)

Selling expense

(15,061)

(15,371)

(24,085)

(26,185)

(28,211)

(30,223)

Admin expense

(10,007)

(13,462)

(18,645)

(20,200)

(21,779)

(23,211)

R&D expense

(18,654)

(39,575)

(53,195)

(57,978)

(59,520)

(60,450)

Others

(7,267)

(10,350)

(14,752)

(13,581)

(14,835)

(16,066)

Operating profit

21,255

33,159

40,379

24,717

30,715

37,922

Other income

2,248

5,965

15,303

14,932

15,500

16,000

Other expense

(989)

(1,546)

(2,057)

(1,564)

(1,600)

(1,400)

Gain/loss on financial assets at FVTPL

126

258

532

364

500

700

Investment gain/loss

(792)

1,635

2,291

2,857

3,438

3,758

Other gains/(losses)

(2,387)

(3,677)

(5,552)

(2,202)

(1,859)

(2,552)

EBITDA

42,766

82,649

118,681

122,830

142,958

165,903

Depreciation

14,605

37,718

56,922

72,048

84,920

98,134

Depreciation of ROU assets

584

1,390

2,643

2,655

2,922

3,327

Other amortisation

5,181

4,444

7,341

5,823

6,422

7,002

EBIT

22,396

39,096

51,774

42,305

48,693

57,441

Interest income

1,830

2,796

2,484

2,437

2,598

3,013

Interest expense

(1,316)

(1,828)

(2,094)

(2,552)

(3,641)

(2,832)

Net Interest income/(expense)

1,618

1,475

(1,216)

649

(1,643)

181

Foreign exchange gain/loss

1,216

639

(1,532)

1,034

(600)

0

Pre-tax profit

21,080

37,269

49,681

39,753

45,052

54,608

Income tax

(3,367)

(5,925)

(8,093)

(5,992)

(7,080)

(8,555)

After tax profit

17,713

31,344

41,588

33,761

37,972

46,054

Minority interest

(1,091)

(1,303)

(1,334)

(1,142)

(1,666)

(2,225)

Net profit

16,622

30,041

40,254

32,619

36,305

43,828

Gross dividends

3,325

9,012

12,077

3,264

7,261

8,766

BALANCE SHEET

2022A

2023A

2024A

2025A

2026E

2027E

YE 31 Dec (RMB mn)

Current assets

240,804

302,121

370,572

371,468

417,643

487,927

Cash & equivalents

51,182

108,512

102,257

68,395

86,000

107,970

Restricted cash

289

583

482

7,030

4,000

5,000

Account receivables

51,723

67,431

72,749

42,489

49,729

54,682

Inventories

79,107

87,677

116,036

138,421

141,553

149,044

Prepayment

8,224

2,215

3,974

5,025

5,741

5,440

Financial assets at FVTPL

20,627

9,563

40,939

54,533

69,833

100,233

Other current assets

16,099

23,481

32,725

54,411

59,258

63,849

Contract assets

13,553

2,660

1,411

1,165

1,530

1,709

Non-current assets

253,057

377,426

412,784

512,262

512,632

504,436

PP&E

131,880

230,904

262,287

292,776

305,858

295,726

Right-of-use assets

3,137

9,679

10,575

9,083

8,560

8,133

Deferred income tax

3,687

6,584

8,559

15,358

15,358

15,358

Investment in JVs & assos

15,485

17,647

19,082

21,781

23,481

25,181

Intangibles

23,223

37,236

38,424

41,485

43,200

44,576

Goodwill

66

4,428

4,428

4,428

4,428

4,428

Financial assets at FVTPL

2,147

2,696

2,655

3,080

3,380

3,780

Other non-current assets

73,431

68,252

66,773

124,271

108,367

107,254

Total assets

493,861

679,548

783,356

883,730

930,276

992,363

Current liabilities

333,345

453,667

495,985

468,451

484,087

513,049

Short-term borrowings

5,153

18,323

12,103

38,485

6,608

0

Account payables

140,437

194,430

241,643

186,742

203,482

224,205

Tax payable

4,326

7,852

10,097

10,716

11,285

11,924

Other current liabilities

147,911

198,363

188,412

181,037

211,595

223,691

Contract liabilities

35,517

34,699

43,730

51,471

51,116

53,230

Non-current liabilities

39,126

75,419

88,682

156,739

153,398

148,311

Long-term borrowings

7,594

11,975

8,258

60,706

45,706

34,706

Bond payables

0

0

0

4,998

5,998

6,998

Other non-current liabilities

31,533

63,444

80,425

91,036

101,695

106,608

Total liabilities

372,471

529,086

584,668

625,191

637,485

661,361


Share capital

2,911

2,911

2,909

9,117

9,117

9,117

Other reserves

108,118

135,899

182,342

237,157

270,118

306,604

Total shareholders equity

111,029

138,810

185,251

246,275

279,235

315,721

Minority interest

10,361

11,652

13,437

12,265

13,556

15,281

Total equity and liabilities

493,861

679,548

783,356

883,730

930,276

992,363

CASH FLOW

2022A

2023A

2024A

2025A

2026E

2027E

YE 31 Dec (RMB mn)

Operating

Profit before taxation

21,080

37,269

49,681

39,753

45,052

54,608

Depreciation & amortization

20,370

43,553

66,906

80,526

94,265

108,463

Change in working capital

97,849

91,094

18,291

(57,100)

29,805

21,455

Others

1,539

(2,190)

(1,424)

(4,043)

(183)

(7,421)

Net cash from operations

140,838

169,725

133,454

59,136

168,938

177,105

Investing

Capital expenditure

(97,457)

(122,094)

(97,360)

(156,808)

(100,480)

(95,550)

Acquisition of subsidiaries/ investments

(10,573)

(16,163)

(3,792)

(2,998)

(16,100)

(31,100)

Net proceeds from disposal of short-term investments

14

0

129

1,727

0

0

Others

(12,580)

12,593

(28,060)

(39,385)

2,450

2,450

Net cash from investing

(120,596)

(125,664)

(129,082)

(197,463)

(114,130)

(124,200)

Financing

Dividend paid

(306)

(3,325)

(9,012)

(12,077)

(3,264)

(7,261)

Net borrowings

(16,413)

18,073

(9,480)

84,783

(30,092)

(16,608)

Proceeds from share issues

0

0

0

40,075

0

0

Others

(2,770)

(1,931)

8,225

(8,167)

(3,847)

(7,066)

Net cash from financing

(19,489)

12,817

(10,268)

104,614

(37,203)

(30,935)

Net change in cash

Cash at the beginning of the year

49,820

51,182

108,512

102,257

68,395

86,000

Exchange difference

610

451

(359)

(148)

0

0

Cash at the end of the year

51,182

108,512

102,257

68,395

86,000

107,970

GROWTH

2022A

2023A

2024A

2025A

2026E

2027E

YE 31 Dec

Revenue

96.2%

42.0%

29.0%

3.5%

8.5%

8.3%

Gross profit

156.7%

54.9%

35.0%

(5.6%)

8.7%

8.3%

Operating profit

299.0%

56.0%

21.8%

(38.8%)

24.3%

23.5%

EBITDA

108.2%

93.3%

43.6%

3.5%

16.4%

16.1%

EBIT

248.1%

74.6%

32.4%

(18.3%)

15.1%

18.0%

Net profit

445.9%

80.7%

34.0%

(19.0%)

11.3%

20.7%

PROFITABILITY

2022A

2023A

2024A

2025A

2026E

2027E

YE 31 Dec

Gross profit margin

17.0%

18.6%

19.4%

17.7%

17.8%

17.8%

Operating margin

5.0%

5.5%

5.2%

3.1%

3.5%

4.0%

EBITDA margin

10.1%

13.7%

15.3%

15.3%

16.4%

17.6%

Return on equity (ROE)

16.1%

24.0%

24.8%

15.1%

13.8%

14.7%

GEARING/LIQUIDITY/ACTIVITIES

2022A

2023A

2024A

2025A

2026E

2027E

YE 31 Dec

Net debt to equity (x)

(0.4)

(0.7)

(0.5)

(0.0)

(0.1)

(0.2)

Current ratio (x)

0.7

0.7

0.7

0.8

0.9

1.0

Receivable turnover days

58.1

52.0

45.0

30.9

32.0

33.0

Inventory turnover days

82.1

65.3

67.7

76.4

72.0

70.0

Payable turnover days

149.2

147.7

142.3

115.5

115.0

117.0

VALUATION

2022A

2023A

2024A

2025A

2026E

2027E

YE 31 Dec

P/E

16.4

9.1

6.8

26.0

23.6

19.5

P/B

2.5

2.0

1.5

3.4

3.1

2.7

P/CFPS

1.9

1.6

2.0

14.3

5.1

4.8

Div yield (%)

1.2

3.3

4.4

0.4

0.8

1.0

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



Disclosures & Disclaimers

Analyst Certification

The research analyst who is primary responsible for the content of this research report, in whole or in part, certifies that with respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report. Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to the date of issue of this report; (2) will deal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3) serve as an officer of any of the Hong Kong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies covered in this report.

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

CMB International Global Markets Limited

Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800

CMB International Global Markets Limited ("CMBIGM") is a wholly owned subsidiary of CMB International Capital Corporation Limited (a wholly owned

subsidiary of China Merchants Bank)

Important Disclosures

There are risks involved in transacting in any securities. The information contained in this report may not be suitable for the purposes of all investors. CMBIGM does not provide individually tailored investment advice. This report has been prepared without regard to the individual investment objectives, financial position or special requirements. Past performance has no indication of future performance, and actual events may differ materially from that which is contained in the report. The value of, and returns from, any investments are uncertain and are not guaranteed and may fluctuate as a result of their dependence on the performance of underlying assets or other variable market factors. CMBIGM recommends that investors should independently evaluate particular investments and strategies, and encourages investors to consult with a professional financial advisor in order to make their own investment decisions.

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Additional information on recommended securities is available upon request.

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