Nomura: BYD - Dual Growth Engines Underpin Sustainable Growth, Maintain Buy, Lower TP to HKD 127
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Nomura maintains a Buy rating on BYD but reduced its target price from HKD 132 to HKD 127, implying a 21.3% upside. The firm highlights BYD's strategic transition toward a dual-engine growth model, combining domestic strength with rapid international expansion, to foster sustainable long-term growth.
Due to intensifying competition in the domestic market and the time required for Blade Battery 2.0 capacity ramp-up, Nomura downgraded its fiscal year 2026 and 2027 shipment forecasts by 13% each. Revenue projections were lowered by 9% and 8%, respectively, while earnings estimates saw a 16% reduction for both years.
Despite these downward revisions, BYD's robust overseas expansion remains a pivotal growth driver. Nomura projects that overseas shipments will constitute 32% to 39% of total passenger vehicle volumes over the next three years. Consequently, international revenue is approaching 50% of total revenue and could exceed this threshold within the next two years.
The firm anticipates a revenue compound annual growth rate of 14% and an earnings CAGR of 25% from fiscal year 2025 to 2028. The revised target price corresponds to 23 times the forecasted 2026 price-to-earnings multiple, based on estimated earnings per share of CNY 4.77. This compares favorably to the current valuation of 19 times, supporting the maintained Buy rating.