On Wednesday, Citi reaffirmed its Buy rating on BYD Co (SZ:002594) Ltd (1211:HK) (OTC: BYDDF (OTC:BYDDF)), with a steady price target of HK$475.00. The firm's optimism is based on several factors that indicate a positive outlook for the Chinese electric vehicle manufacturer.
The recent EU tariff decision is seen as favorable for BYD, particularly in comparison to other Chinese competitors. This development is expected to enhance BYD's export growth prospects into the second and third quarters of 2024. BYD's lower tariff rates in the EU could lead to increased market share within the region. Exports to the EU are anticipated to comprise between one-fourth and one-third of BYD's full-year 2024 target.
Citi also forecasts month-over-month improvements in China's wholesale vehicle market leading into June 2024. As a leader in the passenger vehicle (PV) market, BYD is likely to benefit from the sector's growth. Additionally, the strong order intake observed recently is expected to translate into robust sales for BYD in June and the third quarter of 2024.
The firm anticipates BYD's net profit per car (NP/car) in the second quarter of 2024 to be at least Rmb8,000, attributing this to the improvement in the export mix. The forecast for the full-year 2024 blended average NP/car remains at Rmb8,000 to Rmb10,000. However, there is potential for upside as the year progresses into the second half, and particularly in 2025, when BYD's export volume is projected to double year-over-year.
Citi's continued endorsement of BYD's stock reflects a positive assessment of the company's financial performance and market positioning, especially in relation to its growth and profitability in the electric vehicle sector.
In other recent news, Chinese automaker BYD has set a sales target for 2024, aiming for a 20% increase from its previous year's sales figures. The company plans to significantly boost its international presence, targeting sales of 500,000 vehicles in overseas markets within the year, with aspirations to double that number by 2025. This announcement comes despite a period of slowed profit growth for BYD.
Meanwhile, European Union member states are actively courting Chinese automakers for factory investments. Governments are offering various incentives to attract companies such as BYD, Chery Automobile, and SAIC Motor, which are considering establishing manufacturing bases in Europe. The EU's decision on tariffs could influence competition between European and Chinese manufacturers.
In Brazil, Chinese automakers are ramping up their investment due to the country emerging as the top export destination for Chinese new energy vehicles. BYD has initiated the construction of a manufacturing complex in the country, with Great Wall (HK:2333) Motor announcing that its plant in Brazil would commence operations soon.
At the Beijing auto show, the latest electric vehicles (EVs) were showcased, highlighting China's commitment to an all-electric future. BYD unveiled the U7, the third ultra-luxury model under its Yangwang brand, aiming to ascend further into the high-end market.
These are recent developments and reflect the ongoing evolution of the global EV market.
InvestingPro Insights
Aligning with the optimism of Citi's analysis, BYD Co Ltd (OTC: BYDDF) exhibits strong financial health and market potential, as reflected in the latest InvestingPro data and insights. The company's market capitalization stands at a robust $81.68 billion, and it trades at an attractive P/E ratio of 23.2, which is slightly above the 23.73 mark when adjusted for the last twelve months as of Q1 2024. This suggests that BYD is valued reasonably relative to its earnings.
An encouraging sign for investors is BYD's revenue growth, which has increased by 27.16% over the last twelve months as of Q1 2024. This growth is consistent with Citi's forecast of improved vehicle sales and could bolster BYD's position in the market. Furthermore, BYD's gross profit margin stands at 20.65%, indicating the company's ability to maintain profitability amidst its expansion efforts.
InvestingPro Tips also highlight that BYD holds more cash than debt, suggesting a strong balance sheet, and has been trading at a low P/E ratio relative to near-term earnings growth, which may appeal to value investors. Moreover, BYD is noted as a prominent player in the Automobiles industry, which aligns with Citi's positive outlook on the company's market share and growth prospects.
Investors interested in a deeper analysis of BYD can find additional insights and tips on InvestingPro, including the fact that BYD has maintained dividend payments for 9 consecutive years and is predicted by analysts to be profitable this year. For those looking to leverage these insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 11 additional InvestingPro Tips available, investors can gain a comprehensive understanding of BYD's financials and market positioning.
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