Overseas sales could be a positive surprise in FY26

（以下内容从招银国际《Overseas sales could be a positive surprise in FY26》研报附件原文摘录）
比亚迪(002594)
Maintain BUY. Despite its 4Q25 earnings miss, we are of the view that thecash dent from shortening payable days could be over now and BYD could beone of the biggest beneficiaries from rising oil price in its overseas markets.We believe BYD’s previous high earnings quality and industry-leadingtechnologies could also lay foundation for its net profit growth in FY26-27E.
4Q25 earnings miss on GPM, finance cost. BYD’s 4Q25 revenue waslargely in line with our forecast while GPM narrowed by 0.2ppts QoQ, or0.6ppts lower than our projection. Such miss was offset by its stringentR&D expenses. On the other hand, BYD’s finance cost (incl. forex loss)and government grants in 4Q25 were both below our prior expectation,leading to a net profit miss of 18% in 4Q25. Net profit per vehicle was aboutRMB6,900 in 4Q25, about RMB100 lower than that in 3Q25.
Cash flow dent from shortening payable days may be over. BYD’soperating cash flow of RMB59bn in FY25 hit its lowest level since FY21due to shortened payable days. Its net cash at the end of FY25 wasnarrowed by about RMB62bn YoY. We estimate that BYD’s interestexpense and receivable discounts rose by almost RMB1.3bn YoY in FY25,dragging down its net profit by about 4%. We are of the view that such dentis short-lived, should BYD be able to keep its current payable days.
Overseas markets, energy storage to lift profit. We maintain our FY26Esales volume forecast of 5mn units, with overseas markets contributing1.5mn units (implying 1% YoY decline for domestic sales volume). Webelieve BYD could be one of the biggest beneficiaries from rising oil priceamid the current geopolitical tension, not only for its overseas NEV sales,but also photovoltaic and energy storage battery sales. We thus project itsrevenue to rise 9%/8% YoY and GPM to be largely flat at 17.8% in FY26-27E.
Earnings/Valuation. It appears to us that BYD has been more prudent onR&D expenses with only 9% YoY growth and 8.6% capitalization ratio inFY25 (vs. 1.8% in FY24). We expect R&D expenses to rise 3%/2% YoY inFY26-27E. We also expect government grants in FY26-27E to be at asimilar level as FY25, given the continuously rising deferred incomebalance. Accordingly, we project BYD’s net profit to rise 11%/21% YoY toRMB36.3bn/43.8bn in FY26-27E. We maintain our BUY rating and A/Hshare target price of HK$125/RMB125, based on 23x (prior 20x) ourFY27E P/E, to reflect its brighter overseas outlook. Key risks include lowersales volume or margins than we expect, and a sector de-rating.