Bernstein reiterated an Outperform rating and RMB 334.00 price target on Chinese automaker BYD Co (SZ:002594) Ltd following the company’s preliminary 2023 results.
BYD released 2023 preliminary results in line with market expectations. The anticipated net profit attributable to equity holders is projected to range between RMB 29-31 billion, reflecting a year-on-year increase of 74.5% to 86.5%. This estimate is consistent with the Bloomberg consensus of RMB 30.7 billion. The net profit, excluding extraordinary items, is expected to fall within the range of RMB 27.4-29.7 billion, showcasing a year-on-year growth of 75.2% to 89.9%.
BYD’s estimated EPS is projected to be in the RMB 9.98-10.67 per share range, aligning with the consensus of RMB 10.63 per share. This forecast indicates a notable increase compared to the RMB 5.71 per share reported in 2022.
Entering 2024, BYD finds itself with nearly two months' worth of inventory. As the company works towards reducing its inventory in anticipation of upcoming product launches, pricing pressure is expected to persist.
Despite this challenge, Bernstein analysts anticipate that the sales of premium products and expansion into overseas markets will assist BYD in offsetting margin challenges and achieving earnings growth. Assuming that BYD can increase its overseas and premium sales to constitute approximately 20% of EV volume, this would correspond to around 30% of EV revenue and approximately 40% of EV profit.