BYD: Second Round Of EV/ Hybrid Boom Ahead - Downgrade To Hold

Summary

• BYD's ability to scale production, reduce ASPs, and expand profit margins support its long-term investment thesis, despite the ongoing price war.
• Its dual pronged EV/ PHEV approach has also turned out profitability, as range anxiety and affordability issues trigger its accelerating Hybrid sales on a YoY basis.
• Combined with the Chinese government's higher subsidies and tax breaks, it is unsurprising that BYDDF has reported double-digit YTD sales growth while increasing its FY2024 sales guidance.
• Even so, with the EU/ Canada imposing import tariffs and uncertainty remaining from the November 2024 US elections, we believe that the recent rally is likely to be unsustainable.
• If anything, we are likely to see traders take most (if not all) of their gains off the table, once buying momentum weakens and selling pressure starts.

bluecinema

BYDDF's Long-Term Investment Thesis Remains Robust, Albeit With Near-Term Risks

We previously covered BYD Company Limited (OTCPK:BYDDF) in May 2024, discussing why we had maintained our Buy rating, due to the former's ability to scale its production capacity and to

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The analysis is provided exclusively for informational purposes and should not be considered professional investment advice. Before investing, please conduct personal in-depth research and utmost due diligence, as there are many risks associated with the trade, including capital loss.