Morgan Stanley's counterpart JPMorgan has released a research report indicating that BYD Company (H-share: 01211) delivered better-than-expected second-quarter results, with the bank's focus now shifting to the company's long-term strategic development. The firm maintains a cautious outlook on the broader Chinese automotive industry, favoring automakers that possess scale advantages, diversified product portfolios, and global expansion capabilities. Within this framework, JPMorgan's top picks are BYD Company and GEELY AUTO (00175).
From a strategic perspective, the bank expresses a preference for heavy-duty truck manufacturers over passenger car makers, specifically highlighting SINOTRUK (03808) as a more attractive option in the current landscape.
JPMorgan projects that BYD Company's average profit per vehicle will remain resilient in the second half of this year, with expectations that per-vehicle earnings will hold steady at approximately RMB 10,000 in the fourth quarter. As production capacity gradually ramps up in Hungary, Indonesia, and Brazil, the bank anticipates that per-vehicle profitability in overseas markets could surpass the current level of around RMB 20,000, driven by improved localization and cost efficiencies.
The bank reiterates its "Overweight" rating on BYD Company's H-shares with a target price of HK$124. Simultaneously, JPMorgan continues to assign an "Overweight" rating to Byd Company Limited's A-shares (002594), maintaining a target price of RMB 124.
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