Caitong: First gives BYD ELECTRONIC (00285) a "buy" rating, rapid growth in new energy vehicle business.

Caitong released a research report stating that they are initiating coverage on BYD ELECTRONIC (00285) for the first time, giving it a "hold" rating. Due to the company's rapid growth in the new energy vehicle business, it is expected that the company will achieve operating income of 189.5/208.2/228.2 billion yuan in 2025-2027, with adjusted net profit attributable to the parent company of 5.296/6.140/7.749 billion yuan. The report points out that the company's parts business revenue far exceeded expectations, with adjusted net profit attributable to the parent company slightly exceeding institutional expectations. In 1H25, the company's revenue increased by 2.6% year-on-year to 80.61 billion yuan (lower than the institutional expectation of 85.88 billion US dollars), with assembly and new energy vehicle business revenue slightly below expectations, revenue from new intelligent products far below expectations, and parts business far exceeding expectations. The company's gross margin was 0.4 percentage points lower than expected, sales and administrative expense ratios were 0.2 percentage points higher than expected, and research and development expense ratio was 0.8 percentage points lower than expected. Overall, adjusted net profit attributable to the parent company reached 1.73 billion yuan (slightly higher than the institutional expectation of 1.72 billion yuan). In terms of the new energy vehicle business, revenue growth rate reached over 60%, and products such as intelligent driving continued to grow. In 1H25, the company's new energy vehicle business achieved revenue of 12.45 billion yuan, an increase of 60.5% year-on-year, benefiting from the growth in shipments of intelligent cockpit products and intelligent suspension, as well as the increase in market share of intelligent driving assistance and thermal management products. The parent company's new energy vehicle sales volume in 1H25 was 2.146 million vehicles, an increase of 33% year-on-year.