比亚迪：Momentum to maintain with NEV sales

BYD announced that total auto sales volume achieved 48K units in Oct, anincrease of 16.1% YoY. Among these, NEPV achieved 22K units, an increase of83.1% YoY/ 18.5% MoM. The Company announced its 4Q20E earnings guidancewith a bottom-line range of RMB 4.2bn-4.6bn in 2021E. We believe BYD willbenefit most from recent improving sentiment on NEV, from both sales volumeand market sentiment perspective.

We raised our bottom-line forecast by 24% toRMB 5.2bn in 2020E to reflect a higher ASP and GPM on auto segment.Reiterate BUY rating and raise TP to RMB223.8.BYD continues rapid growth in NEV segment in Oct. BYD sold 47K units(ICE+NEV) of auto in Oct, an increase of 16.1%YoY. Its NEV businessremains on the high growth path with a total sales volume of 23K units, anincrease of 84.7% YoY. Among these, NEPV achieved 22K units (+83.1%YoY) whereas NECV achieved 1.2K units (+123.2% YoY). We believe that thetotal delivery of model Han is in line with our expectations, with a total volumeof 7,545units in Oct. We expect that the sales volume of Han will continue torise MoM within the year as the production of the blade battery is ramping up.In terms of ICE, sales reached 25K units in Oct, down 14.2% YoY/up 9.9%MoM.3Q20achieved RMB1.75bn, an increase 1363% YoY, in line with theCompany’s earnings preview. Among them, BYD Electronics (285HK, BUY)contributed approximately RMB1.22mn while other segments contributedRMB527mn.

We believe that a series of new models, underpinned byproduction ramp-up of blade battery, will support the sales performance in theshort term. We expect BYD will achieve total NEPV sales of 45K units in Nov& Dec, an increase of 112%YoY. We expect DM4.0(expected rollout in1Q21E) and new BEV platform (expected rollout in 2021Shanghai Auto Show)will further boost its NEV sales in 2021E.Higher ASP and GPM raise the 2021E bottom-line forecast.

We expectthat strong sales of model Han among its NEPV will increase to 20% in NEVsales mixbased on our new calculation. Therefore, aggregate ASP for theNEPV segment increased by 9% to RMB187Kin 2020. In the meanwhile, webelieve that BYD will continue to utilize its cost control advantage, driving itsimprovement in GPM of auto segment. We therefore raised our 2021Eearnings forecast by 30% to RMB6.88mn.