Overseas, R&D support 1Q26 earnings resilience

（以下内容从招银国际《Overseas, R&D support 1Q26 earnings resilience》研报附件原文摘录）
比亚迪(002594)
Maintain BUY.BYD’s1Q26average selling price(ASP)and GPM both beatour prior forecast with overseas contribution,which echoed our previous reporttitled“overseas sales could be a positive surprise in FY26”(link).We expectFY26E GPM to sustain,as we estimate overseas vehicle GPM could be6-8ppts higher than that in China.BYD also becomes more prudent on expenses,especially on R&D,which could provide earnings resilience with highercapitalization ratio.We still believe BYD is one of the biggest beneficiaries fromhigh oil price.
1Q26revenue,GPM beat on overseas.BYD’s1Q26revenue fell by12%YoY amid a sales volume decline of30%YoY,or13%higher than our priorforecast,as overseas accounted for46%of BYD’s total sales volume in1Q26.That also lifted its GPM by1.4ppts QoQ to18.8%,0.3ppts higherthan our forecast.R&D expenses were more disciplined than we hadprojected while forex loss was higher than expected.All combined resultedin a net profit of RMB4.1bn in1Q26,or about RMB0.7bn higher than ourforecast.
BYD’s overseas potential could still be underestimated.We estimatethat BYD’s overseas vehicle GPM could be6-8ppts higher than that inChina,based on1Q26and4Q25data with assumptions of minimal QoQchanges in ASPs and GPMs.We maintain our FY26E total sales volumeforecast of5mn units but revise up overseas sales volume by0.1mn unitsto1.6mn units.Accordingly,we raise our FY26E revenue forecast by2%.We also believe higher sales volume from overseas could sustain BYD’sFY26E GPM,despite raw-material price hike and heavy capex.We projectFY26GPM to only narrow by0.1ppt YoY to17.6%.
R&D capitalization provides earnings resilience.We estimate that R&Dcapitalization ratio rose to about17%in1Q26from9%in FY25,which wasone of the reasons for the net profit beat.As we noted a few times before,BYD’s low R&D capitalization ratios in the past four years have minimizedits amortization burden in the future,which could provide its earningsresilience.We raise its FY26/27E R&D capitalization ratio assumptionsfrom7%/7%to15%/12%.Accordingly,we revise up FY26/27E net profitforecasts by4%/6%to RMB37.9bn/46.3bn.
Valuation/Key risks.We maintain our BUY rating and A/H share targetprice of HK$125/RMB125,based on22x(prior23x)our FY27E P/E,toreflect the recent market volatility.Key risks to our rating and target priceinclude lower sales volume or margins than we expect,as well as a sectorde-rating.