Lyon: Under the leadership of BYD COMPANY (01211), the second half of the year will return to dominance. Reaffirming a high level of confidence in outperforming the market rating.

Lyon released a research report stating that BYD COMPANY (01211) has completed the bottoming out process, and it is expected that its leading position will return in the second half of this year, releasing growth opportunities in overseas markets and energy storage systems (ESS). The bank reiterated its "High Conviction Outperform" rating and maintained a target price of HK$120 for the stock, while also reiterating a "High Conviction Outperform" rating for the A-share of BYD Company Limited (002594.SZ) with a target price of 120 Chinese yuan. The bank expects that market concerns about the company's profitability will ease, forecasting a second-quarter net profit of approximately 7 billion Chinese yuan, achieving a steady recovery quarter by quarter. With a strong lineup of new car models, it is expected that domestic sales pressure will ease, and domestic market share is expected to rebound to around 23% to 27% by the end of the year. Looking ahead to 2027, export volume is expected to further increase to 2.5 million vehicles, driving profit growth by over 30%. Lyon pointed out that BYD Company Limited achieved overseas sales of 792,200 vehicles in the first half of this year, a year-on-year increase of 71%. With channel expansion and promotion of new car models, it is expected that momentum in overseas exports will accelerate in the second half of the year, with total sales expected to exceed 1.8 million vehicles in 2026 and reach a historical high of around 2.5 million vehicles in 2027, contributing approximately 80% of the profits. In terms of the domestic market, capacity for the second generation of fast-charging models is expected to gradually be released in the second half of the year, accounting for around 30% of total deliveries in 2026, with new car models commanding an average premium of 5,000 to 20,000 yuan, enough to offset current cost inflation. Additionally, the bank mentioned that BYD Company Limited has a leading advantage in the energy storage systems (ESS) field, with its fast-charging technology ecosystem ahead of the industry by 6 to 12 months. Lyon predicts that BYD Company Limited's second-quarter revenue will reach 212.6 billion yuan, a quarterly increase of 42%; net profit will rise to 7.2 billion yuan, a quarterly increase of 76.7%, mainly benefiting from a strong overseas product portfolio and high-end development.