BYD’s June sales grew 5% year-on-year, overseas sales reached a record high, and Deutsche Bank maintained its Buy view

Overview

This report is Deutsche Bank’s company update on BYD (01211.HK). It focuses on June sales, overseas sales, Great Tang flagship SUV orders, second-quarter profit sensitivity, the Gen-2 Blade Battery supply transition, and the internally developed intelligent driving chip “Xuanji A3.” The overall conclusion is positive, with the report arguing that sequential sales recovery, improved orders, and product mix optimization will drive a significant earnings recovery.

Core views

The core views include: first, June group wholesale sales grew 5% year-on-year and 5% sequentially, returning to positive growth mainly due to record overseas sales; second, domestic sales continued to decline year-on-year but improved sequentially as Great Tang deliveries began; third, Great Tang orders were strong after launch, driving substantial sequential growth in June new orders; fourth, operating leverage from sequential second-quarter sales growth, combined with a better product mix, could drive a 145% sequential increase in net profit; fifth, tight short-term Gen-2 Blade Battery supply supports lower discounts and longer delivery times for related models, but capacity is expected to increase month by month and improve by the end of the third quarter; sixth, the internally developed Xuanji A3 chip strengthens BYD’s integration of intelligent driving software and hardware.

Analysis framework

The report mainly uses sales tracking, order tracking, sequential quarterly earnings sensitivity analysis, product mix and supply-chain constraint analysis, together with an assessment of BYD’s medium- to long-term competitiveness based on intelligent driving chip specifications and peer comparisons. Sales data are divided into group, overseas, and domestic wholesale sales, and are further mapped to quarterly sales and profit forecasts.

Methodology notes

• Company fundamentalsSales-to-profit sensitivity analysis

  Operating leverage

  The report links a 58% sequential increase in second-quarter wholesale sales with a 145% sequential increase in net profit, arguing that higher sales dilute fixed costs while the improved product mix provides the main basis for significant profit growth.

• Supply-chain analysisCapacity bottleneck and delivery-cycle assessment

  Battery supply transition

  The report notes that the transition of Gen-2 Blade Battery production from long blade cells to short blade cells has caused tight supply, with delivery times for related models reaching one to two months and dealers offering no price discounts.

• Competitiveness analysisSoftware-hardware integration capability assessment

  Internally developed intelligent driving chip

  The report compares BYD’s Xuanji A3 with the in-house chip strategies of NIO, Xpeng, and Li Auto, arguing that internally developed chips support advanced intelligent driving capabilities and software-hardware integration.

Asset mapping & comparison

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

• BYD 01211.HK

  The primary covered security in the report; Deutsche Bank assigns a Buy rating.

  Strengths

  Strong overseas sales growth, robust Great Tang orders, clear second-quarter operating leverage, limited discounts on Gen-2 Blade Battery models, and enhanced intelligent driving capabilities from the internally developed Xuanji A3 chip.

  Weaknesses

  Domestic wholesale sales declined 22% year-on-year, while delivery times for some models lengthened during the battery supply transition.

  Comparison

  The report compares BYD’s internally developed chip strategy with NIO’s Shenji NX9031, Xpeng’s Turing AI chip, and Li Auto’s Mach M100 chip, arguing that in-house chips have become an important direction in the competition for advanced intelligent driving.

  Risks

  Slower-than-expected battery capacity ramp-up, continued weakness in domestic demand, intensified price competition, lower-than-expected conversion of new-model orders, and slower-than-expected commercialization of intelligent driving.

• BYDDY

  BYD ADR, listed in the report as a related security identifier.

  Strengths

  Related to BYD’s fundamentals and overseas investor risk appetite.

  Weaknesses

  The ADR may also be affected by foreign exchange, liquidity, and cross-market valuation differences.

  Comparison

  The underlying asset remains primarily mapped to BYD’s Hong Kong-listed performance.

  Risks

  Linkage between Hong Kong-listed and ADR prices, foreign-exchange fluctuations, and overseas market risks.

Key data

• June group wholesale sales403,472 unitsUp 5% year-on-year and 5% sequentially.
• June overseas sales175,349 unitsUp 95% year-on-year and 9% sequentially, reaching another record high.
• June domestic wholesale sales228,123 unitsDown 22% year-on-year and up 2% sequentially.
• Second-quarter wholesale sales1,108,048 unitsDown 3% year-on-year and up 58% sequentially.
• Estimated June new ordersApproximately 291,000 unitsUp 53% sequentially, mainly driven by the launch of the Great Tang flagship SUV.
• Great Tang order backlog>70,000 unitsDescribed by the report as non-cancellable orders, with a delivery wait of more than three months.
• Second-quarter net profit forecastRMB 10 billionExpected to grow 145% sequentially.
• Third-/fourth-quarter sales forecast1.4 million units / 1.7 million unitsDriving estimated full-year 2026 sales of 4.9 million units, up 6% year-on-year.
• Gen-2 Blade Battery incremental capacity planCapacity equivalent to approximately 30,000 vehicles per monthExpected to fully resolve the battery supply shortage by the end of the third quarter.
• Xuanji A3 chip computing powerMore than 2,100 TOPS for a three-chip clusterBuilt on a 4-nanometer process, with a 16-core CPU, 3-core NPU, and memory bandwidth of up to 273GB/s.

Impact & implications

For investors, the report’s main implication is that BYD’s near-term share-price narrative may shift from domestic sales pressure toward overseas growth, strong orders for popular new models, pricing resilience under supply constraints, and sequential profit recovery. If Gen-2 Blade Battery capacity is released as planned, further sales ramp-up in the third and fourth quarters would strengthen full-year delivery and earnings visibility. Progress on intelligent driving chips also provides a technology-upgrade narrative for long-term valuation.

Risks

• Domestic wholesale sales are still declining year-on-year; if domestic demand recovers more slowly than expected, sales and profit forecasts could be affected.
• If the Gen-2 Blade Battery capacity ramp-up is delayed, delivery waiting times could remain extended and limit sales release.
• If price competition in the new energy vehicle industry intensifies again, it could weaken the profit sensitivity from product mix improvement and the absence of dealer discounts.
• The Great Tang order backlog must convert into actual deliveries; if delivery or demand conversion falls short of expectations, the orders’ support for revenue and profit would diminish.
• Although intelligent driving chips have long-term strategic significance, the implementation of L3/L4 capabilities remains subject to technology, regulatory, and commercialization timelines.
• The report discloses several service and investment banking relationships between Deutsche Bank and the company; investors should monitor the disclosure of potential conflicts of interest.

What to watch

• Whether group, overseas, and domestic wholesale sales continue to improve sequentially from July through September.
• The Great Tang flagship SUV order backlog, delivery cycle, and actual delivery pace.
• Fulfillment of the plan to add capacity equivalent to approximately 30,000 vehicles per month for Gen-2 Blade Batteries.
• Whether the battery supply shortage is fully resolved by the end of the third quarter as expected in the report.
• Whether actual second-quarter net profit approaches RMB 10 billion and the forecast 145% sequential growth.
• Whether third- and fourth-quarter sales reach the forecast path of 1.4 million and 1.7 million units.
• Progress in deploying the Xuanji A3 chip in mass-production models, intelligent driving functions, and energy-consumption performance.