Chinese automobile giant BYD Co. Ltd (HK:1211) released its Fiscal 2023 profit estimates, which displeased investors. BYD shares fell 4.7%, hitting a new 52-week low of HK$173.40 today. For FY23, BYD expects net profit between RMB29 billion and RMB31 billion, slightly missing analysts’ estimates. The net profit forecast indicates a growth of 74.5% to 86.5%, much lower than the 446% jump delivered in FY22.
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BYD’s 2023 Performance
BYD is a leading player in China’s new energy vehicle (NEV) market. Despite overtaking American rival Tesla (NASDAQ:TSLA) in global EV deliveries in Q4 2023, BYD’s profits fell short of expectations due to the ongoing price war in the EV market. In November 2023, BYD cut the prices of its EVs to meet its annual sales volume target of 3 million units.
China’s NEV market is highly competitive. Yet, BYD successfully achieved record-high NEV deliveries and improved profitability in 2023. Importantly, the company attributed the net profit jump to greater brand dominance, fast growth in overseas sales volume, steadily expanding scale advantage, and robust cost-cutting drive.
As per a report released yesterday by Singapore’s Land Transport Authority (LTA), BYD’s auto registrations (1,416) made up 4.7% of total new car registrations (30,225) in 2023. Further, BYD was Singapore’s fifth best-selling EV brand, jumping from the 12th position in 2022. Meanwhile, Tesla stood at the tenth spot, with 941 auto registrations.
What is the Future of BYD Stock?
On Monday, Bernstein analyst Eunice Lee reiterated a Buy rating on 1211 shares with a price target of HK$334 (79.5% upside).
Overall, 1211 stock has a Strong Buy consensus rating on TipRanks, backed by four Buys versus one Hold rating. The BYD Co. Ltd share price forecast of HK$283.11 implies 52.1% upside potential from current levels.
