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CLSA Reaffirms 'Outperform' Rating on BYD, Citing Underestimated Profitability
CLSA has reaffirmed its “High-Conviction Outperform” rating for BYD Company Ltd. (01211.HK), arguing that the market is underestimating the electric vehicle maker's profitability following recent share price volatility.
Market Reaction Seen as Overblown
In a research note, the investment group stated that recent fluctuations in BYD's stock were triggered by investor concerns over potential headwinds. These include possible reductions in China's export tax rebates and the looming threat of tariffs from the European Union.
However, CLSA analysts believe this market reaction is excessive and does not fully appreciate the company's underlying earnings strength. The firm's recent financial results, which were in line with expectations, also contributed to the stock's movement.
AdGrowth Drivers and Forecasts
CLSA projects that BYD's earnings growth will be driven by two key factors: a strong rebound in its domestic sales and an accelerated expansion into overseas markets.
The firm forecasts that the automaker is on track to achieve a monthly sales volume of 500,000 vehicles by the end of the year. Furthermore, CLSA expects BYD to achieve a significant increase in its export volumes next year, reinforcing its positive outlook.
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