海外，研发支持1Q26收益弹性

Overseas, R&D support 1Q26earningsresilience Maintain BUY.BYD’s 1Q26 average selling price (ASP) and GPM both beatour prior forecast with overseas contribution, which echoed our previous reporttitled “overseassales could be a positive surprise in FY26”(link).We expectFY26E GPM to sustain, as we estimate overseas vehicle GPM could be 6-8pptshigher than that in China. BYD also becomes more prudent on expenses,especiallyon R&D,which could provide earnings resilience with higher China Auto 1Q26revenue, GPM beat on overseas.BYD’s 1Q26 revenue fell by 12%YoY amid a sales volume decline of 30% YoY, or 13% higher than our priorforecast, as overseas accounted for 46% of BYD’s total sales volume in1Q26.That also lifted its GPM by 1.4ppts QoQ to 18.8%, 0.3ppts higherthan our forecast.R&D expenses were more disciplined than we had BYD’s overseas potential could still be underestimated.We estimatethat BYD’s overseas vehicle GPM could be 6-8pptshigher than that inChina, based on 1Q26 and 4Q25 data with assumptions of minimal QoQchanges inASPsand GPMs.We maintain our FY26E total sales volumeforecast of 5mn units but revise up overseas sales volume by 0.1mn unitsto 1.6mn units. Accordingly, we raise our FY26E revenue forecast by 2%. R&D capitalization provides earnings resilience.We estimate that R&Dcapitalization ratio rose to about 17% in 1Q26 from 9%in FY25, which wasone of thereasonsfor the netprofit beat. As we noted a few times before,BYD’s low R&D capitalization ratios in the past four years have minimizedits amortization burden in the future, which could provide its earningsresilience. We raise its FY26/27E R&D capitalization ratio assumptions Source: FactSet Valuation/Key risks.We maintain our BUY rating and A/H share targetprice of HK$125/RMB125, based on 22x (prior 23x) our FY27E P/E, toreflect the recent market volatility.Key risks to our rating and target priceinclude lower sales volume or margins than we expect, as well as a sector Disclosures& Disclaimers Analyst Certification The research analyst who is primary responsible for the content of this research report, in whole or in part, certifies thatwith respect to the securities orissuerthat 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) 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 the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies coveredin this report. CMBIGM Ratings BUY: Stock with potential return of over15% over next 12 monthsHOLD: Stock with potential 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 tooutperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperformthe relevant broad market benchmark over next 12 months CMB InternationalGlobal MarketsLimited Important Disclosures There are risks involved in transacting in any securities. The information contained in this report may not be suitable forthe 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 requirements. Past performance has no indication of future performance, and actual events may differ materially from that which is contained in thereport.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 or its affiliate(s) to whom it is distributed.This report is not and should not be construed as an offer or solicitation tobuy or sell any security or any interest insecurities or enter into any transaction.NeitherCMBIGMnor any of its affiliates, shareholders, agents, consultants, directors, officers or employees shall beliable for any loss, damage or expense whatsoever, whether direct or consequential, incurred in relying on the information contained in this report.Anyonemaking use of the information contained in this report does so entirely at their own risk. The information and contents contained in this report are based on the analyses and