Dongfang Securities: Maintains "Buy" rating for BYD, expects domestic sales to gradually improve in the second half of the year.

According to a research report by Oriental Securities, BYD's sales in July reached 419,200 vehicles, a year-on-year increase of 21.8% and a month-on-month increase of 3.9%; cumulative sales from January to July totaled 1,808,500 vehicles, representing a year-on-year decrease of 10.5%. In July, the company's overseas sales hit a new high, while the decline in domestic sales year-on-year narrowed significantly, leading to a substantial improvement in overall sales. Overseas sales continue to set new records, with the Brazil market advancing in both production and sales. The company launched the electric K-car model Racco in the Japanese market, with over 5,000 orders in the first week, making it a potential milestone for the company in opening up the Japanese market. The acceleration of launches and the strategy of fast charging are expected to continue boosting the company's overseas sales and market share, with exports becoming a core growth point for both sales and profits. It is believed that the impact of policy exhaustion in the third quarter will gradually weaken compared to the first half of the year, and consumer confidence in automotive purchases is expected to recover marginally, with the companys domestic sales likely to maintain an improving trend. On the other hand, sales growth from Tengshi and Fangchengbao, as well as the ramp-up in deliveries of models such as Datang, will drive an increase in the proportion of the companys sales of vehicles priced at 200,000 yuan and above, which will in turn promote an upward shift in the average selling price of the company's products. With both volume and price rising, the company's domestic profitability is expected to gradually recover. EPS is projected to be 4.64, 5.37, and 6.24 yuan for the years 2026 to 2028, respectively, with a target price of 125.28 yuan based on a price-to-earnings average valuation of 27 times for comparable companies in 2026, maintaining a "buy" rating.