Damo: Reiterates the target price of “increase in holdings” rating of BYD shares (01211) of HK$121

The Zhitong Finance App learned that Morgan Stanley released a research report saying that the management of BYD (01211) is confident that the domestic market will recover in the second half of this year. The backlog of orders for ultra-fast charging models is strong, overseas sales and profitability are resilient, and cash flow has improved. The bank reconfirmed its “Overweight” rating, with a target price of HK$121.

The bank expects the monthly operating rate target for overseas sales in the second half of this year to be 180,000 to 200,000 vehicles, and bicycle profits are generally stable. BYD's overseas sales target for 2027 exceeds 2.5 million vehicles. As overseas factories mature, transportation and tariff costs, which are currently headwind, may be transformed into smooth structural profit margins in the future. BYD has deployed 10,000 ultra-fast charging stations and continues to expand in cooperation with Shell and Sinopec. This year's target is moving from 20,000 charging stations to a long-term target of 90,000, next year and 40,000 respectively.

The bank believes that the company's high-end overseas offers pricing capabilities that its peers lack. Capital expenditure began to stabilize after years of expansion, and overall fixed asset investment began to slow down. Overcharging and batteries were priorities; the energy storage business began to become the second pillar. Damo predicts that BYD's earnings per share for 2026, 2027 and 2028 will be RMB 4.21 (same below), RMB 5.42 and RMB 6.52, respectively, with revenue forecasts of RMB 851,597 billion, RMB 933.966 billion and RMB 1.01 trillion, respectively. The bank believes that policy risks are generally known and manageable in the market. As localized production progresses, BYD is capable of dealing with them.