Morgan Stanley: BYD Company (002594) Risk Reward Update
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Morgan Stanley updates its risk-reward profile on BYD Company (002594.SZ), maintaining an Overweight rating with an unchanged probability-weighted A-share target price of RMB 125. The close price on April 20, 2026, stood at RMB 102.91. The firm trimmed its 2026 and 2027 gross margin forecasts by 0.3 and 0.2 percentage points to 18.3% and 18.7%, respectively, reflecting rising raw material costs and higher bill-of-materials expenses from upgraded intelligent driving and ultra-fast charging specifications. Consequently, the 2026-2027 net profit and EPS estimates were lowered by 13% and 12%, respectively.
Despite these estimate reductions, the probability-weighted target holds steady due to an improved bull-case scenario. The DCF-based base-case value decreased 6% to RMB 116, and the bear-case value fell 7% to RMB 48. However, the bull-case value was raised 10% to RMB 219, reflecting enhanced medium-term overseas growth and energy storage demand. Volume forecasts remain largely stable at 5.2 million units for 2026 and 5.7 million for 2027, with a new 2028 estimate of 6.2 million units. Morgan Stanley highlights BYD's vertically integrated supply chain as a key competitive advantage in pricing, while the broader adoption of intelligent driving tech could transform the company into a significant technology enabler.