BYD's journey abroad is creating new opportunities for the company. JPMorgan believes that in the next 1-2 years, BYD's global expansion and potential growth opportunities in plug-in hybrid products will drive its stock price revaluation.

This week, Chinese EV giant BYD announced plans to invest $1 billion in building a factory in Turkey with an annual production capacity of 150,000 EVs, with expectations to start production at the end of 2026. Apart from the Turkish factory, BYD's four overseas manufacturing bases or vehicle production lines in Thailand, Indonesia, Brazil, and Hungary will also be built in 2026 and gradually increase production capacity, with the Thai factory first going into production in the first half of 2025.

JPMorgan analysts, Lai Yizhe and others, stated in a report released on Tuesday that they are bullish on BYD's expansion in Southeast Asia, Latin America, and the European Union, and believe that the overseas market will not only provide stronger growth opportunities but also help the company maintain higher profit margins. The bank has raised BYD's AH stock target price for the next 12 months by more than 80% to HK$475/RMB 440 and adjusted its sales estimates.

Analysts wrote in the report that BYD's global delivery volume (including China) is expected to reach 6 million units in 2026, with overseas market deliveries accounting for approximately 1.5 million units and the remainder in China, which means that the company's share of the global light vehicle market (including gasoline vehicles) will increase from 3% in 2023 to 7% in 2026, while the share in the new energy vehicle market (excluding plug-in hybrids) will remain around 22% during the same period.

JPMorgan believes that BYD's new energy vehicle products are excellent in terms of cost and configuration and can compete with most similar models in the global market. Analysts believe that BYD has further business opportunities in some overseas markets. Although the EU will raise tariffs, BYD will strive to compete overseas through configuration or product features, not price.

Regarding BYD's plug-in hybrid products, analysts pointed out that:

We expect demand for plug-in hybrid vehicles to remain strong before 2030, and our forecast is that plug-in hybrids and extended-range electric vehicles will account for 60% of China's total demand for new energy vehicles by 2030, almost doubling from 31% in 2023. As a leading plug-in hybrid vehicle company, BYD will benefit from this trend, and we expect the company's annual compound sales growth rate to be as high as 26% for the fiscal years 2023-2026.

Regarding the company's future expansion path, analysts pointed out that although the base is mostly low, the prospects for Southeast Asia, Latin America, and the EU markets are good. The domestic markets in Brazil and Indonesia also have huge potential (2.3 million units and 1 million units, respectively).

JPMorgan believes that Thailand and Hungary, which already have a strong supply network, will become BYD's main production centers, and the overseas market will not only provide stronger growth opportunities but also maintain excellent profit margins.

In the short term, BYD's sales in the second quarter of this year were 0.987 million units, with a QoQ/YoY growth rate of 58%/40%. JPMorgan expects net income for the quarter to exceed CNY 8-8.4 billion. Due to the large number of orders received for the new Qin L and Hanbaru 06 models, coupled with the adoption of the DMI5.0 platform for new models in the second half of 2024, JPMorgan has raised its sales expectations for the fiscal year 2024 to 4 million units, and 5 million units/6 million units for 2025/2026, respectively.

Based on the above analysis, JPMorgan has raised its sales and profit forecasts for BYD for the fiscal years 2024 to 2026 by 8-32% and 10-16%, respectively, and has set a target price of HK$475/RMB 440 for the next 12 months.