BYD Reports Surge in Preliminary Net Income on Record High Sales

Danny Lee, Bloomberg News

BYD Co. Dynasty series electric vehicles at a dealership in Beijing, China, on Monday, Aug. 28, 2023. BYD is scheduled to release earnings results today. , Bloomberg

(Bloomberg) -- BYD Co. shares jumped the most in more than nine months in Hong Kong trading after China’s biggest electric car maker posted record preliminary third-quarter earnings.

Third-quarter net income will come in as high as 11.5 billion yuan ($1.6 billion), compared to 5.7 billion yuan a year earlier, the automaker said in an exchange filing late Tuesday. Profits in the nine months ended Sept. 30 may be between 20.5 billion yuan to 22.5 billion yuan, exceeding net income for all of 2022 of 16.6 billion yuan.

BYD stock rose as much as 7.5% in morning trading, the biggest gain on an intraday basis since Jan. 12. The company attributed its strong third-quarter earnings performance to record sales in the period, despite intensifying competition, which it said it’s offsetting with greater cost savings and efficiency gains.

Read More: China EV Stocks Jump After BYD’s ‘Exceptionally Strong’ Prelim

One of the reasons underpinning BYD’s success is the fact it also makes the batteries that power its electric and hybrid cars, as well as some of the semiconductor chips that go in them. That added manufacturing prowess allows BYD greater control over parts of the supply chain, meaning it performs better in controlling costs.

In the three months to Sept. 30, BYD managed to sell almost as many fully electric vehicles as Tesla Inc., falling just 3,456 vehicles short of superseding the US automaker run by Elon Musk.

What Bloomberg Intelligence Says

BYD’s preliminary 3Q net profit of 9.5-11.5 billion yuan outperformed our scenario by as much as 53%, suggesting sequential margin growth, with lithium cost cuts and scale economies outweighing the impact of price competition. Rising exports and luxury sales could give earnings added buoyancy in 2024. — Joanna Chen and Steve Man

Including hybrids, BYD sold a total 822,094 vehicles for another record quarter, helping to cement its lead as China’s best-selling car brand.

BYD’s strength comes as sales growth of new-energy cars in China more broadly is slowing.

Retail sales of new-energy vehicles in the world’s biggest autos market rose 22.1% from a year earlier to 746,000 units in September, data from the Passenger Car Association showed last week.

But as consumers in China rein in spending, more new-energy passenger cars are being exported.

China-based automakers shipped 91,000 clean vehicles abroad in September, including pure-electric and plug-in hybrids, an increase of 107% from a year earlier, the PCA data showed.

Tesla ranked top with 30,566 units sent to overseas markets from its Shanghai factory. Much of the remainder was driven by local automakers such as BYD and Shanghai Automotive Industry Corp.

(Updates share move, adds comment from Bloomberg Intelligence analysts)