BYD's domestic recovery has started, and overseas sales may bring an upside surprise

Overview

This report is Goldman Sachs' conference summary and company research released after BYD's 4Q25 results. The core view is that domestic sales recovery has begun, and overseas orders are being driven by high oil prices and rising new energy penetration, creating room for upside surprises. With its second-generation Blade Battery, fast-charging ecosystem, and complete product lineup, the company continues to strengthen its competitiveness in China's and the global new energy vehicle markets.

Core views

Goldman Sachs believes 1Q26E will be BYD's low point for both sales and net profit in 2026E, with sequential improvement likely from 2Q26E to 4Q26E. 2026E revenue is expected to grow 12%, mainly driven by 10% sales growth; gross margin is expected to remain stable at 17.6%, with pricing support from new models and fast-charging technology partially offsetting cost pressure. The overseas market may become a second growth curve: from 2025-2030E, overseas contributions are expected to account for 83% of incremental vehicle sales, and overseas profit contribution is expected to rise from 40% in 2025 to 62% in 2030E.

Analysis framework

The report analyzes 4Q25 results, key points from the company conference call, quarterly sales and profit forecasts, the pace of overseas expansion, R&D and capex, balance sheet changes, and DCF valuation. Goldman Sachs also references the GS Factor Profile, M&A Rank, and Quantum database framework to evaluate growth, financial returns, valuation multiples, and relative ratings versus covered companies.

Methodology notes

• Valuation methodsDCF

  12-month DCF target price

  Goldman Sachs uses the DCF method to set BYD's 12-month target prices for A shares and H shares, with parameters including a 10.8% WACC and a 2.0% TGR; the H-share target price is set at a 10% discount to the A-share target price.

• Factor frameworkGS Factor Profile

  Growth, financial returns, valuation multiples, and composite percentile

  This framework uses forward-looking sales, EBITDA, EPS, ROE, ROCE, CROCI, and valuation multiples to compare percentile rankings against the market and industry peers.

• M&A frameworkM&A Rank

  M&A likelihood rating

  Goldman Sachs classifies covered companies into levels 1 to 3 based on their potential acquisition probability; BYD's disclosed M&A Rank is 3, indicating that M&A factors are not material to the target price.

• Data platformQuantum

  Database of financial history, forecasts, and ratios

  Quantum is Goldman Sachs' proprietary database used for single-company deep dives and cross-industry, cross-market company comparisons.

Asset mapping & comparison

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

• BYD Co. (A) / 002594.SZ

  Core covered name, with an A-share target price of Rmb137.

  Strengths

  Domestic order recovery, technological innovation, second-generation Blade Battery, fast-charging ecosystem, complete product matrix, and vertical integration capabilities.

  Weaknesses

  4Q25 net profit missed expectations, cash balance declined, and downward revisions to government subsidies and interest income affected earnings forecasts.

  Comparison

  Both A shares and H shares trade below their historical 12-month forward P/E averages; the A-share upside to target price is about +34%.

  Risks

  Intensifying EV competition, slower-than-expected overseas expansion, and weaker-than-expected external battery sales.

• BYD Co. (H) / 1211.HK

  The H-share listing of the same company, with a target price of HK$134.

  Strengths

  Benefits from the same global new energy vehicle expansion and rising overseas profit contribution.

  Weaknesses

  The H-share target price applies a 10% discount to the A-share target price.

  Comparison

  The current H-share price of HK$104.70 implies about +28% upside to target.

  Risks

  Market risk appetite, overseas execution pace, and changes in the competitive landscape could affect valuation recovery.

• Overseas new energy vehicle business

  Second growth engine.

  Strengths

  Orders are accelerating in markets such as Australia, New Zealand, and the Philippines; plants in Hungary and other locations are planned to begin mass production in March-April 2026.

  Weaknesses

  In 2026, overseas sales will still mainly rely on exports, and local capacity contribution is still in the ramp-up stage.

  Comparison

  Goldman Sachs expects 2026E overseas sales of 1.58mn units, above the company's 1.5mn-unit target.

  Risks

  Slower-than-expected local production ramp-up, changes in trade and regulatory environments, and weaker-than-expected overseas channel and brand development.

Key data

• March orders+170% MoMOrders across the Dynasty and Ocean networks increased month over month, supporting the view of a domestic recovery.
• 2026E sales5.05mn units, +10% yoyDriven jointly by stable domestic deliveries and overseas expansion.
• 2026E domestic deliveries-2% yoyA significant improvement from the -9% decline in 2025.
• 2026E overseas sales1.58mn units, +51% yoyAbove the company's 1.5mn-unit target, leaving room for upward revision.
• 2026E revenue growth+12%Mainly driven by sales growth.
• 2026E gross margin17.6%Broadly flat versus 17.7% in 2025.
• 2026E R&D expensesRmb63bnAbove Rmb58bn in 2025, reflecting continued investment in the new energy ecosystem and AI-related technologies.
• 2026E net profitRmb39.3bn, +21% yoyUp from Rmb32.6bn in 2025.
• 2025 capexRmb157bnOf which about Rmb70bn was related to batteries; the company expects future capex to stabilize at around Rmb100bn.
• 4Q25 net cashRmb19bnDown from Rmb87bn in 3Q25 and Rmb113bn in 4Q24, affected by working-capital changes.
• Target priceRmb137 / HK$134Implying about +34% upside for A shares and about +28% upside for H shares.

Impact & implications

The report is positive for BYD: in the near term, recovering domestic orders and gradual quarterly profit improvement should help rebuild market expectations; in the longer term, the overseas market, higher new energy penetration under the high-oil-price backdrop, the second-generation Blade Battery, and fast-charging network buildout could strengthen sales and profit upside. On valuation, the 12-month forward P/E for A/H shares is below historical averages, which Goldman Sachs sees as attractive.

Risks

• Intensifying competition in the EV industry, especially if price competition or product iteration pressure in China exceeds expectations.
• Slower-than-expected overseas expansion, including localization capacity, channels, branding, and regulatory factors.
• Weaker-than-expected external battery sales, reducing the incremental contribution from the battery business.
• Foreign exchange losses, lower government subsidies, and reduced interest income may continue to weigh on net profit.
• Working-capital changes and shorter supplier payment terms may affect cash balances and free cash flow.

What to watch

• Whether the order recovery across the Dynasty and Ocean networks can continue to translate into deliveries.
• Whether 2Q26E-4Q26E sales and net profit improve sequentially as Goldman Sachs expects.
• The execution progress of increasing second-generation Blade Battery capacity by 30-50k units per month.
• Progress toward building 20,000 fast-charging stations by year-end, including 18,000 in cities and 2,000 in highway scenarios.
• The ramp-up of overseas markets, especially local capacity in Australia, New Zealand, the Philippines, and Europe.
• Whether 2026E gross margin can be maintained at around 17.6%, and whether pricing for new models can offset cost pressure.
• Whether quarterly results, overseas breakthroughs, and strong sales will trigger valuation recovery.