J.P. Morgan reiterates Overweight on BYD A/H shares, noting positive incremental signals from post-holiday order momentum, overseas demand, and the ultrafast-charging ecosystem

Overview

This report summarizes the key discussions after J.P. Morgan’s call with BYD management, focusing on post-May holiday sales and order momentum, product feedback after the Beijing auto show, second-generation Blade battery and ultrafast-charging ecosystem, ADAS strategy, domestic competition, overseas expansion, cost inflation handling, and financial outlook after 1Q26. J.P. Morgan maintains Overweight on both BYD A-shares and H-shares and sets Dec-26 target prices of Rmb120 and HK$120.

Core views

The key view is that BYD’s 2026 recovery will be driven by both volume and profitability. Domestically, an improved order slate from a new design cycle, ultrafast-charging models, and higher price bands gives management greater confidence in the 3.5 million to 4.0 million vehicle target. Overseas, management maintains the 1.5 million vehicle target and cites strong demand, while J.P. Morgan believes the overseas business will be the primary value driver, estimating overseas business to represent about 60% of automotive revenue in 2026. On earnings, mix upgrade, higher overseas revenue mix, and vertical integration can offset cost inflation and pricing pressure.

Analysis framework

The report combines management interviews, order and sales guidance, product-cycle observation, ultrafast-charging infrastructure progress, overseas production-capacity deployment, per-vehicle profit calculation, and valuation modeling. On valuation, the A-share target price is set with an approximately 10% historical premium to the H-share target; the H-share target is based on a blended multiples and DCF approach, and references a long-horizon fair value range under the FY30E scenario.

Methodology notes

• Valuation methodsBlended multiples and DCF valuation

  The target price is supported by long-horizon multiple scenarios and DCF analysis

  The H-share target price of HK$120 comes from blended valuation; the report states the long-term fair value range is HK$94 to HK$145, with the target taken near the midpoint of that range. The A-share target price of Rmb120 is about a 10% premium to H-shares, consistent with the A/H premium over the past two to three years.

• Fundamental forecastSales and product-mix driven

  Profitability improvement is explained by sales recovery, price-band upgrade, and higher overseas mix

  J.P. Morgan expects BYD sales to grow about 60% quarter-on-quarter in 2Q26 and for 2H26 to grow another approximately 60% versus the first half. It expects more than 30% of 4Q26 domestic sales to be from new models above Rmb200k, which would improve per-vehicle ASP or profit.

• Competitive analysisEcosystem competition

  Fast-charging competition is shifting from battery chemistry alone to an integrated battery-network-software ecosystem

  The report believes BYD’s Blade battery, ultrafast-charging network, and software capabilities are differentiated and can help maintain domestic market share in 2026, while improving customer recognition of ownership cost and charging convenience.

Asset mapping & comparison

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

• BYD Company Limited - A (002594.SZ)

  Investment coverage name, A-share target price Rmb120, rating Overweight

  Strengths

  Domestic sales target above bearish market expectations, with new models and ultrafast-charging ecosystem supporting order flow; A-share target priced at about a 10% premium to H-shares based on historical levels.

  Weaknesses

  Domestic competition is intense; BYD’s domestic NEV share had fallen from 35% to 27% in 2025, and stock performance has lagged MXCN.

  Comparison

  A-share valuation is priced with approximately a 10% premium to H-shares, consistent with the premium range over the past two to three years.

  Risks

  Underperformance in sales, price competition, cost inflation, FX volatility, and mass-market competition at home and overseas.

• BYD Company Limited - H (1211.HK)

  Investment coverage name, H-share target price HK$120, rating Overweight

  Strengths

  Overseas expansion, a larger PHEV mix, ultrafast-charging ecosystem, and global plant ramp-up underpin long-term value.

  Weaknesses

  The target price depends on market sentiment and risk appetite, with a wide long-run fair-value range.

  Comparison

  H-share blended valuation implies fair value of about HK$119 and is rounded up to HK$120; long-run share-price range is HK$94 to HK$145.

  Risks

  Potential overseas battery capacity constraints, overseas plant ramp-up underperformance, and industry competition and policy/regulatory uncertainty.

• BYD Blade battery and flash-charging ecosystem

  Core technology and product catalyst

  Strengths

  Second-generation Blade battery penetration is rising quickly, with monthly output ramping from 30k to 50k units; ultrafast-charging station network is expanding rapidly to form a charging ecosystem.

  Weaknesses

  Requires sustained capital spending and execution; overseas network buildout remains in early stages.

  Comparison

  The report argues competition is no longer only about battery chemistry, but about an integrated ecosystem of battery, network, and software.

  Risks

  Technology experience below expectations, competitors catching up on charging networks, and delays in capacity ramp or station buildout.

• BYD overseas business

  Primary value driver

  Strengths

  Management maintains 1.5 million overseas vehicle target, and J.P. Morgan estimates overseas business to account for about 60% of automotive revenue in 2026. The overseas PHEV share rose from about 40% in 2025 to over 50% in Jan-Apr 2026.

  Weaknesses

  Management noted that battery capacity may become a constraint rather than demand being insufficient.

  Comparison

  The report believes BYD’s overseas competition is more content-based than price-based, unlike the domestic price-competition environment.

  Risks

  Overseas capacity, logistics, trade policy, FX, and local competitive risks.

Key data

• 2026 domestic sales guidance3.5 million to 4.0 million unitsManagement’s target, implying 0% to 14% growth depending on domestic competitive dynamics.
• 2026 overseas sales target1.5 million unitsImplying around 50% year-on-year growth; management said strong demand could create upside risk.
• Grand Tang bookingsaround 30k units in the first 24 hours, currently around 100k unitsManagement said most of the new models have a waiting period of about three to six months.
• 2Q26 BYD sales forecastabout 60% sequential growthForecast by J.P. Morgan, and it expects 2H26 to grow about 60% versus the first half.
• Domestic ultrafast-charging stationsmore than 5,700By end-April, this is 25% of the year-end target of 20,000.
• Overseas ultrafast-charging station plan6,000 within 12 months, including 3,000 in EuropeUsed to support the overseas charging ecosystem.
• Ultrafast-charging performanceabout 9 minutes from 10% to 97% SOC at ambient temperature; less than 12 minutes from 20% to 97% SOC at -30°CThe report views this as a key selling point in ultrafast-charging ecosystem competition.
• 4Q26 forecast share of domestic premium new modelsabove 30%Mainly referring to new models with Blade batteries and ultrafast-charging solutions, most of which are priced above Rmb200k.
• Estimated per-vehicle ASP or profit upliftabove Rmb5kJ.P. Morgan believes this can effectively offset cost inflation and price competition.
• 1Q26 per-vehicle net profitRmb8.9kAfter excluding one-off FX losses and BYD-E impact, this is above 1Q25’s Rmb6.8k.
• 1Q26 FX impactloss of about Rmb2bnCompared with around Rmb1.9bn 1Q25 FX gain, management sees continued hedging as an ongoing financial priority.
• 2030E sales assumption7,000,000 unitsValuation model includes 3,565,755 domestic units and 3,434,245 overseas units.

Impact & implications

For investment implications, the report shifts BYD’s rerating logic from pure price competition to technology ecosystem, product-mix, and overseas expansion. If new-model orders continue to materialize, ultrafast-charging network expansion proceeds, and user conversion improves, domestic share could be stabilized; if overseas demand and capacity ramp progress smoothly, increasing overseas revenue and profit share would become valuation support. 1Q26 is viewed as an earnings trough, and accelerating sales in 2Q and the second half, overseas profitability improvement, and domestic product momentum are the next stock catalysts.

Risks

• Sales underperforming expectations, especially if the domestic target of 3.5 million to 4.0 million units or the overseas target of 1.5 million units is not achieved.
• Escalating mass-market brand competition in China and overseas, including Volkswagen, Geely, and Great Wall Motor.
• Domestic price competition compresses ASP and per-vehicle profit, offsetting mix-upgrade benefits.
• Battery capacity, global plant ramp-up, or transport capability limits overseas growth.
• FX volatility continues to affect profitability, with around Rmb2bn FX loss already seen in 1Q26.
• Progress of ADAS and L3 rollout may be constrained by technology, regulation, and safety requirements.
• Ultrafast-charging network buildout, utilization, or user experience may fall short of expectations.

What to watch

• Whether post-May holiday orders are sustained and whether 100k Grand Tang orders and similar new models convert into deliveries.
• Whether 2Q26 sales achieve around 60% sequential growth and whether 2H26 achieves around 60% semiannual growth versus the first half.
• Whether domestic sales target of 3.5 million to 4.0 million units holds under competitive conditions.
• Whether the overseas target of 1.5 million units is revised up and whether battery capacity becomes a material bottleneck.
• Progress on domestic 20,000 end-of-year ultrafast-charging station target and overseas plan of 6,000 stations.
• The pace of second-generation Blade battery monthly ramp to 30k-50k units and penetration increase.
• Execution pace of ADAS tech days, Nvidia partnership, and the transition from L2+ to L3.
• Whether per-vehicle net profit, ASP, and product mix validate the assumption of over Rmb5k per-vehicle uplift.