HSBC lowers estimates, cuts target price on BYD, maintains Buy rating

HSBC analysts lowered their price target for BYD (SZ:) shares in a note Thursday, citing lower net profit estimates.

The bank lowered its target for BYD A-shares to RMB301 from RMB302), H-shares to HKD322 from HKD332, and the RMB counter of the H-shares at RMB301 (81211 HK, RMB217.00). It also lowered its 2024-26e net profit estimates for BYD by 8%, 4% and 4%, respectively, mainly on lower revenue estimates.

Even so, the bank maintained its Buy rating on the stock.

“We believe BYD is committed to achieving ICE-EV range equivalence with cheaper prices and better performance through superior hybrid tech,” said HSBC. “Further, we believe peers cannot easily replicate the company’s tech leadership, enhanced by a decade of innovation and unique vertical integration capabilities.”

“Overall, with the PHEV mix tracking strong in 4M24 (41% versus 33% in 2023, CPCA data), we believe BYD is well positioned to capture volume opportunities, leveraging its PHEV technology,” analysts add.

Along with its budget Glory versions, targeting the below RMB150k market, and the ongoing new car cycle in the compact and medium-sized segments, HSBC expects BYD to continuously gain market share, especially because of the ICE contraction.