UBS: BYD shares (01211) are expected to sell more than 2.5 million vehicles overseas in 2027, reaffirming the “buy” rating

The Zhitong Finance App learned that UBS released a research report saying that after attending the BYD (01211) analyst and investor conference, their positive views and confidence in the company increased. The bank expects BYD to sell more than 2.5 million vehicles overseas in 2027 and achieve sustainable unit profits; in the domestic market, based on strong demand for second-generation blade battery models, the bank saw further evidence of increased sales volume and increased profit margins. UBS reaffirmed its “buy” rating and industry preferred stock status, with a target price of HK$135.

In overseas markets, UBS pointed out that although the potential reduction in export value-added tax rebates is still a major concern for investors and is not within the company's control, BYD has favorable conditions to mitigate the impact. The company has built an overseas production capacity of nearly 1 million vehicles, including Brazil's annual production capacity of 300,000 vehicles, which has recently increased to 25,000 vehicles per month; Thailand's annual production capacity of 150,000 vehicles and Indonesia's annual production capacity of 150,000 vehicles has already been put into operation; and Hungary is expected to start production of another 300,000 vehicles in November or December this year.

UBS believes that although the initial cost is higher than the domestic plant, after 1 to 2 years, the savings in logistics costs of more than 10,000 yuan per vehicle, as well as tariff costs, 27% in the European Union and 35% in Brazil, will be able to offset the additional costs of localized production. Furthermore, as sales expand, dealer support cost sharing is also expected to improve.

In the domestic market, UBS said that strong demand for fast charging models is driving sales growth and profit margins. Management estimates that there are currently 250,000 undelivered orders, as reflected in the second-quarter interim report, an increase of more than 25 billion yuan in advance payments over 25 billion yuan, which means that dealers have paid the full amount for nearly 200,000 vehicles.

The high pricing and combination of new products, and the company's monthly additional 20,000 battery production capacity, is expected to drive continued improvement in profit margins in the second half of this year. The company aims to build 20,000 fast charging stations by the end of this year. The progress is in line with expectations. Next year or later, it may be further built to push the domestic market share towards the long-term goal of 25%.