<News Alert> Positive profit alert: 3Q23 earnings surged by 67%-102% y-o-y, beat expectations
- BYD issued profit alert, expecting its 3Q earnings surged by 67%-102% y-o-y
- Strong earnings attributable to its robust NEV business (volume sales surged 53% and lower raw material cost pressure) and its electronics division (penetration into iPhone value chain, demand recovery etc)
- Vehicle sales on track to meeting the 3m units target for 2023; expect robust 3Q earnings to support share price performance
- We currently have BUY rating with TP of HK$410
Robust 3Q earnings from higher vehicle sales and margins expansion from its vehicle business given its vertical integration and lower raw material helped to mitigated the intense market competition. Another positive driver is its electronics business, which through deeper penetration into the iPhone value chain and demand recovery of the Android business. The electronic unit is expected to post 119%-165% net earnings growth for 3Q. Besides, BYD’s strong NEV business has also supported the growth of EV components supply.
While the company is on track to meeting its 3m vehicle sales target for 2023, we anticipate market competition to accelerate in 4Q23 as automakers will be more aggressive during the peak season to boost sales. However, BYD has a broad vehicle spectrum (through multiple brand strategy) and its constant model revamp helps to sustain the sales momentum, like Seal and the Song series, covering both BEV and PHEV segments
The strong 3Q earnings is expected to support the near-term share price performance. We are reviewing our FY23/24 earnings assumptions and our current TP is HK$410.