BYD (01211) Report Interpretation

Overview

This earnings-call note examines how BYD's overseas expansion, domestic battery-capacity ramp and Blade Battery 2.0 deployment shape its earnings outlook. Nomura believes the company is evolving from a China EV leader into a global EV business and maintains Buy with a HKD127 target price.

Core views

Nomura's central takeaway from BYD's 1H26 results call is that overseas operations are becoming the principal profit engine. Despite a CNY4.7 billion foreign-exchange loss in 1H26, compared with a CNY3.2 billion gain in 1H25, BYD delivered a gradual improvement in profit per shipment through global expansion. Management said overseas profit per vehicle, excluding forex, remained above CNY20,000 in 1H26 and should be sustainable until additional overseas capacity comes on stream. Nomura estimates that overseas markets contributed up to 90% of 2Q26 operating profit, supporting its view that BYD is transitioning from a China-focused EV leader to a global EV play. Management expects monthly overseas sales of 180,000-200,000 units during 2H26E, implying 80-90% year-on-year growth and 1.8-1.9 million overseas shipments for 2026E. It targets more than 2.5 million overseas unit sales next year, with potential upside. BYD's overseas manufacturing buildout includes a Hungary factory expected to begin mass production by year-end, initially focused mainly on plug-in hybrids before shifting gradually toward battery EVs; annual capacity of 300,000 units in Brazil; and an Indonesia plant already in service. Management acknowledged that initial overseas production costs are not yet cheaper than exports, but expects localization ultimately to reduce export burdens including ocean freight of more than CNY10,000 per vehicle to the EU and EU tariffs of around CNY40,000. In China, management said sales and orders are currently constrained mainly by production and Blade Battery 2.0 capacity rather than demand. Planned capacity additions are intended to support roughly 20,000 additional new cars per month, with the bottleneck expected to be fully resolved by end-2026E or January/February 2027E. Blade Battery 2.0 is then expected to be deployed across all new BYD vehicles. Management also targets a 25% long-term local market share in China. As local auto capacity is already established and spending shifts toward charging infrastructure and Blade Battery 2.0 capacity, management expects capex to trend down over the next few years. Blade Battery 2.0 and superfast charging are central to the company's domestic and international strategy. BYD had deployed 10,000 supercharging stations in China as of end-August 2026, targets 20,000 by end-2026E, and plans to add a further 30,000 in 2027E and 40,000 in 2028E—90,000 additions within three years. Internationally, it targets 6,000 supercharging stations in the short term with partners including Shell. The report also notes that management expects energy-storage-system battery sales to rise from about 40-50GWh in 2025 to 60-70GWh in 2026, with further ESS development possible once battery-capacity constraints are resolved. On policy and competitive concerns, management said a potential removal or reduction of VAT export rebates remains unsettled, but considered rebates reasonable because they help OEMs avoid double taxation across countries. In a worst-case scenario, BYD believes it can pass incremental costs on to overseas customers. Regarding the EU's proposed Industrial Accelerator Act, management expects all OEMs to be affected and said BYD could respond quickly through partnerships with EU supply-chain participants. Nomura maintains Buy and its HKD127 SOTP-based target price, viewing overseas expansion and an eventual domestic capacity resolution as drivers of further improvement despite a challenging China market backdrop.

Analysis framework

Nomura synthesizes management's earnings-call comments with 1H26 and 2Q26 operating indicators, focusing on overseas unit economics, shipment targets, capacity plans, charging deployment, policy exposure and battery-capacity constraints. It values BYD using a sum-of-the-parts approach, applying separate earnings multiples to the auto-and-related-products segment and BYD Electronics.

Methodology notes

• Valuation methodsSOTP (Sum-of-the-Parts) Valuation

  Sum-of-the-parts valuation

  Nomura values BYD's auto-and-related-products business and BYD Electronics separately, then combines the segment values to derive its HKD127 target price.

• Valuation methodsP/E and PEG Valuation

  Forward P/E and PEG-based multiple valuation

  The auto-and-related-products segment is valued at 25x FY26F P/E, described as a 12% discount to BYD's historical median and also based on 1x PEG for FY25-28F; BYD Electronics is valued at 17x FY26E P/E.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Localization of overseas production and supply-chain partnerships

  The report links overseas capacity and potential EU supply-chain partnerships to lower freight and tariff burdens and to BYD's response to regulatory changes.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• BYD (01211.HK)

  Primary covered company; overseas expansion, battery-capacity resolution and Blade Battery 2.0 deployment are the report's principal earnings drivers.

  Strengths

  Overseas profit per vehicle above CNY20,000 excluding forex in 1H26, ambitious overseas shipment targets, expanding global capacity and charging infrastructure.

  Weaknesses

  Domestic sales and orders remain constrained by Blade Battery 2.0 capacity, while initial overseas manufacturing costs are not yet cheaper than exports.

  Comparison

  The auto-and-related-products segment is valued at 25x FY26F P/E, a 12% discount to BYD's historical median and based on 1x PEG for FY25-28F.

  Risks

  Intensifying competition could pressure margins or market share; overseas expansion or demand benefits from technology upgrades could fall short.

• BYD Electronics

  A separately valued component in Nomura's sum-of-the-parts valuation of BYD.

  Comparison

  Valued at CNY57.2bn using 17x FY26E P/E based on Bloomberg consensus estimates, stated as 0.5 standard deviations above its historical median.

Key data

• 1H26 foreign-exchange resultCNY4.7bn lossVersus a CNY3.2bn gain in 1H25.
• Overseas profit per vehicleAbove CNY20,000Excluding forex in 1H26; management expects it to be sustained before additional overseas capacity is used.
• Overseas operating-profit contributionUp to 90%Nomura's calculation for 2Q26.
• 2026E overseas shipments1.8-1.9mn unitsImplied by expected 80-90% year-on-year growth.
• Monthly overseas sales in 2H26E180,000-200,000 unitsManagement guidance.
• R&D capitalization rate19% in 1H26CNY5.6bn of CNY28.9bn, versus 4% in 1H25 or CNY1.3bn of CNY30.9bn.
• China supercharging stations10,000 at end-August 2026Target of 20,000 by end-2026E.
• 2026 ESS battery sales60-70GWhManagement expectation, versus about 40-50GWh in 2025.

Impact & implications

Nomura views overseas unit economics, volume growth and localization as the main supports for BYD's earnings trajectory. A resolution of Blade Battery 2.0 capacity constraints could remove the current domestic production limitation, while charging-network expansion and potential lower capex provide additional support to the operating outlook.

Risks

• Further intensification of market competition could negatively affect BYD's margins and/or market share.
• Overseas business expansion could be slower than expected.
• Technology-platform upgrades may generate a smaller-than-expected positive effect on demand.

What to watch

• Whether Blade Battery 2.0 capacity constraints are resolved by end-2026E or January/February 2027E.
• Progress toward 180,000-200,000 monthly overseas sales in 2H26E and 1.8-1.9 million overseas shipments in 2026E.
• Start of mass production at the Hungary factory and further overseas localization initiatives.
• Implementation of China and overseas supercharging-station expansion plans.
• Developments in VAT export rebates and the EU's proposed Industrial Accelerator Act.