Morgan Stanley: Reiterates BYD COMPANY (01211) "Overweight" Rating with a Target Price of HKD 121

Morgan Stanley released a research report stating that BYD COMPANY (01211) management is confident in the recovery of the domestic market in the second half of this year, with a strong backlog of orders for ultra-fast charging models and resilient overseas sales and profitability, along with improved cash flow. The firm reaffirmed its "Overweight" rating with a target price of HKD 121. The firm expects that the monthly operational target for overseas sales in the second half of this year will be 180,000 to 200,000 vehicles, with per-vehicle profit remaining relatively stable. BYD Company Limited aims for over 2.5 million in overseas sales by 2027, and as overseas factories mature, the currently adverse transportation and tariff costs may turn into a structural profit margin tailwind. BYD Company Limited has deployed 10,000 ultra-fast charging stations and continues to collaborate with Shell and Sinopec for expansion, aiming to reach 20,000 charging stations this year, with long-term goals of 90,000 stations, including 30,000 and 40,000 for next year and the year after, respectively. The firm believes that the company's international high-end strategy provides pricing power that competitors lack. Capital expenditures have begun to stabilize after years of expansion, and overall fixed asset investment is slowing down, with ultra-fast charging and batteries being prioritized; the energy storage business is starting to become a second pillar. Morgan Stanley forecasts BYD Company Limited's earnings per share for 2026, 2027, and 2028 to be 4.21 RMB, 5.42 RMB, and 6.52 RMB, respectively, with revenue forecasts of 851.597 billion RMB, 933.966 billion RMB, and 1.01 trillion RMB. The firm believes that policy risks are largely known and controllable by the market, and with the advancement of localized production, BYD Company Limited is capable of coping.