2015年第一季度盈利步入正轨

BYD (1211 HK/002594 CH) 1Q25 earnings on track Maintain BUY.We are of the view that BYD’s 1Q25 results, including all thekey metrics, continued to show its high earnings quality, despitethe ongoingvehiclemodel transition.We believe both sales volume and gross margin in1Q25 are on track to achieve our full-year forecasts. New models, including theHan L,Tang LandTitanium 3, could boost its sales from 2Q25.Although it ispossible for BYD to lead another round of price war in 2H25 to maintain itsmarket share, we believe its high earnings quality could helpkeep its net profitper vehicle above RMB10,000. TPHK$470.00RMB440.00PriorTPHK$470.00RMB440.00Up/Downside18.4%18.7%CurrentPriceHK$397.0RMB370.8 China Auto Net profit of RMB9,148 per vehicle in 1Q25.BYD’s 1Q25 net profit ofRMB9.2bn was in line with its preliminary announcement of RMB8.5bn-10bn.Gross margin of 20.1% was in line with our prior forecast. R&Dexpensesof RMB14.2bn in 1Q25wereabout RMB1.5bn higher than ourprojection, which was offset by lower selling expensesand higher forexgains than we had expected. Both sales volume and gross margin in 1Q25 are on track to achieveour full-year forecasts.We are of the view that BYD’s 1Q25 sales volumeis on tracktomeetour full-year forecast of 5.25mn units.Its 1Q25 grossmargin of 20.1% despite rising discounts for inventory clearance of oldmodels is alsoclosetoour full-year forecast of 19.7%, takingextracostsfrom ADASinto consideration.It is also possible for BYD to lead anotherround of price war in 2H25 given its current inventory level, in our view.Although we do not expect ADAS functions equippedonthe Model Year2025 vehicles to bringsignificant new demand, BYD’s comprehensivemodel line-up, leading cost reduction capabilities and new technologies,especiallythoserelated to batteries, could make itself well positioned inmaintaining its market share in FY25.Overseas salesvolume of0.2mnunits (or 20% oftotal salesvolume)in 1Q25also exceeded our priorexpectation. Earnings/Valuation.Wefine-tuneourFY25Eearningsforecastbylowering average selling price slightly and raising R&D expenses and forexgains a bit, which resultsin an unchanged net profit of RMB57.5bn.Wehave also added our FY27E earnings forecasts. We maintain our BUYrating and target price of HK$470 for H share and RMB440 for A share,both of which are still based on 23x (unchanged) our FY25E EPS. Keyrisks toour rating and target price include lower sales or marginsthan weexpect, and a sector de-rating. Source: FactSet Disclosures& Disclaimers Analyst CertificationThe 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 issuerthat 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 codeof 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 thedate of issue of this report; (2) willdeal 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 theHongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies coveredin this report.CMBIGM or its affiliate(s) have investment banking relationship with the issuers covered in this report in preceding 12 months. CMBIGM RatingsBUY : Stock with potential return of over 15% over next 12 monthsHOLD: Stock withpotential return of +15% to-10% over next 12 monthsSELL: Stock with potential loss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform the relevant broad marketbenchmark over next 12 months:Industry expected to perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmarkover next 12 monthsGlobal MarketsLimited CMB International Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”) is a wholly owned subsidiary of CMBInternational Capital Corporation Limited (a wholly ownedsubsidiary of China Merchants Bank) Important DisclosuresThere are risks involved in transacting in any securities. The information contained in this report may not be suitable for the purposes of all investors.CMBIGMdoes not provide individually tailored investment advice. This report has been prepared without regard to the individual investment objectives, financial positionor special requiremen