<Earnings First Take> BYD (1211 HK) – Strong 1Q22 results; inline with company positive profit alert
- Total revenue rose 63% y-o-y on strong NEV sales
- Gross profit surged 60%; GP margin eased slightly due to rising raw material costs
- Net profit increased 240% to Rmb808m
- While the strong 1Q22 results is positive on share price performance, the broad market volatility could also impact its share price movement
What’s new
BYD has released its 1Q22 financial performance based on the Chinese accounting standards.
Total revenue increased 63% y-o-y to Rmb66.8bn.
In 1Q22, total NEV sales surged over 400% to about 386k units. The company has announced its exit from traditional vehicle production since Mar-22.
GP margins eased 0.2ppt to c.12.4% and total gross profit surged 60% to Rmb8.3bn compared to 1Q21. We attribute the GP margin pressure to the escalation in commodity prices because of the geopolitical tension.
Operating expenses increased over 60% during the quarter, due to higher sales and R&D expense (which rose over 90%)
Net earnings surged 240% to Rmb808m, within the company’s earlier profit alert guidance.
The strong performance has also resulted in net operating cash inflow of Rmb11.9bn to support its business expansion.
The overall Chinese vehicle market has been impacted by the pandemic lockdown and interrupting vehicle production and sales. While the strong 1Q22 results is encouraging, we also think BYD share price to be affected by the current volatile broad market.
We currently rate BUY with TP of HK$330