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<Research>UBS Finds BYD GPM Good; Accelerating R&D Expenditure Pressures NP Per Car
Recommend 5 Positive 8 Negative 3 |
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UBS highlighted in a research report that BYD COMPANY (01211.HK) achieved net profit of RMB4.569 billion in 1Q24, up 11% YoY, mainly driven by higher deliveries. Gross profit margin rose 4 ppts YoY to 21.9% during the period, which is a pleasant surprise. The broker predicted that seasonal factors would lead to a continuous rebound in sales at the end of the year, and the improvement in operating leverage will help to boost BYD's profitability. However, UBS commented that BYD's 1Q net profit only reached 13% of the consensus full-year forecast. The broker believed management's more cautious growth guidance reflected near-term pressure on margins amid intensifying competition and seasonal factors, with accelerating research and development (R&D) expenditures putting pressure on net profit per vehicle. Meanwhile, UBS cautioned that while BYD's continued investment in electric vehicles and intelligent driving technology will help enhance its medium-term competitiveness, the accelerated pace of R&D spending will also put pressure on net profit per vehicle. UBS rated BYD Buy with a target price of $360. AAStocks Financial News |
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