2Q21: Results Missed Estimates, But Outlook Beat Expectation; Upgrade To BUY

BYD’s 2Q21 net profit came in below estimate at Rmb936m (-40% yoy/+294% qoq), due to the margin squeeze given the transition from ICVs to PHEVs and the spike in raw material cost and R&D expense, but profit nearly quadrupled qoq in 2Q21, driven by the ramp-up of PHEV sales. Management raised 2021 EV sales targets by 50% to 600,000 units and set 2022 target at 1.5m units, beating our estimates. We lift 2021-23 EPS by 7%/24%/22% respectively. Upgrade to BUY and raise target price to HK$400.00.