Strong sales despite industry challenges
- Diversification mitigated the lockdown impact; strong Apr-22 and 4M22 vehicle sales ahead of peers
- Intensifying smart features to enhance market competitiveness
- Launching high-end new models is an earnings catalyst
The strong Apr-22 sales once again demonstrates the company’s diversification strategy (both in terms of location and supply chain), which have been tailwinds to propel its growth outlook. We anticipate the logistic bottlenecks and supply chain interruption to improve in 2H, supporting our earnings growth projections.
While the company is focusing fully on the NEV business, it is working on the smart technology with its DiLink and DiPilot to support vehicle connectivity and autonomous capabilities to keep itself abreast with the industry trends. Hence, its vehicle models will incorporate these new technologies to attract buying interests.
We had previously highlighted the company’s focus on both pure electric and hybrid technology to drive its future growth. Based on the latest sales statistics, the sales split between these two technologies is about equal.
The expansion of its vehicle series, especially the “Marine” models is a volume sales catalyst. The latest Seal model under the Marine series is priced at over Rmb200,000, compared to Dolphin and Destroyer at below Rmb150,000. BYD is also eyeing the high-end car segment and its premium brand (??)is scheduled to be launched in 2H22, at potential ASP range of Rmb500-800k. The first model under this brand is expected to be a SUV, and likely to start sales in 1H23. All these are positive on future profit margins.
Hence, BYD is in a strong position to growth its earnings rapidly in the coming few years. FY21-23F net earnings CAGR is estimated at around 90%.