CITIC Securities raised the target price to 139 yuan / 159 HKD (the original target price of 94.9 yuan / 103.5 HKD), continue to focus on recommendations, maintain a "buy" rating.
The firm said BYD Han's monthly sales have been raising faster than expected, which is expected to become an "trendy model".
BYD Han sales continue to exceed expectations, brand power significantly improved, their report said.
Here is the full report:
The company has recently undergone two important changes.
(1) BYD Han's monthly sales have been raising faster than expected, which is expected to become an "trendy model".
Its technology attributes and brand power improving significantly, so that the electric car-making business can be revalued against the new car-making forces.
(2) The holding of BYD electronic fundamentals continue to improve.
We raised the target price to 139 yuan / 159 HKD (the original target price of 94.9 yuan / 103.5 HKD), continue to focus on recommendations, maintain a "buy" rating.
BYD Han sales continue to exceed expectations, brand power significantly improved.
According to China Association of Automobile Manufacturers (CAAM) , the sales of 1,205 and 2,400 units of "Han" in July and August exceeded the market's expectation, which eliminated the market's concern about the production capacity bottleneck of the company's blade battery.
Currently, "Han" has abundant orders in hand, and it is expected that the sales of "Han" EV and DM will exceed 4,000 and 2,000 units respectively in September, and the trend will continue to be positive.
We believe "Han" models will become the new "Trendy" electric vehicles, driving the company's brand power to increase significantly.
Compared with Tesla, BYD has its own advantage of differentiation.
BYD has a stable manufacturing capability that Tesla and other new carmakers cannot achieve in the short term.
It supplies its own core triboelectric components and has mastered the full range of electric hardware manufacturing technology.
In addition, BYD also takes into account of the PHEV plug-in hybrid technology route.
Though the disadvantage is that BYD brand power, channel management ability is relatively weak, it is now vigorously expanding Mall store marketing, efforts to make up the shortcomings.
From the perspective of model, "Han" is more oriented to household consumers compared to competitive products, and achieves certain differentiated competition with competitive products in the terminal.
"Han" drives the improvement of brand power and technology attributes, which brings value reassessment against new car-making forces.
BYD's electric passenger cars have many models, and the price of a single car is lower in the sales structure.
With the launch of Han and Songplus, it is expected to push up the company's model upgrade, and enter the competition field of more than 200,000 yuan with new car-making forces, etc.
With the hot sale of Han, it is expected to bring brand power improvement.
The current BYD electric car manufacturing business production and sales base plate is solid, the brand side of the clear improvement, the follow-up electronic and electrical architecture, intelligent also has the potential to breakthrough.
With reference to the valuation level of new car-making forces in U.S. stocks, we will judge the value of the company's electric passenger car business from about 46 billion yuan previously to about 150 billion yuan.
Meanwhile, BYD's electronic share of large customers to enhance the trend is clear, BYD Holdings directly benefit.
Risk factors:
Technology route changes
The company's new energy vehicle production and sales fell short of expectations
New energy vehicle policy fluctuations.
Investment recommendations.
We maintain the company's 2020/2021/2022 net profit forecast of 5.2/5.3/6 billion yuan, the current A-share price of $103.6, corresponding to 2020/21/22 55/54/48 times PE; H-share price of $105.4, corresponding to 2020/21/22 47/46/41 times PE.
The company's supply chain neutralization strategy from 2020 onwards is steadily progressing, BYD semiconductor, power battery and other advanced electric components business is expected to gradually cash in on the intrinsic value.
Recent sales of "Han" exceeded expectations, with its brand power significantly improved and the value of the electric passenger car business ushered in revaluation; BYD electronics fundamentals continue to improve.
We will raise the company's value judgment to 379 billion yuan (formerly 259 billion yuan), continue to focus on recommendation, maintain the company (A + H shares) "buy" rating.
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