Net profit of 11.7 billion! 1,255,600 units delivered! Is BYD absolutely "safe"?

The competition between new energy vehicle companies has temporarily come to an end, and the new forces of car manufacturing have temporarily deviated from the whirlpool of price wars.

For new energy vehicle companies, production capacity will still be a very important measure in the next three to five years, which is related to whether car companies can continue to survive in the market.

Of course, BYD and Tesla, which are in the first echelon of new energy, have a very solid position, have passed the threshold of production capacity, and successfully achieved profitability.

The breakeven of most new energy vehicle companies is still a problem.

On July 14, BYD released a performance forecast, announcing that the company is expected to achieve a net profit of 10.5 billion yuan to 11.7 billion yuan in the first half of the year, a year-on-year increase of 192.05% to 225.43%.

As for the reasons for the growth in performance, BYD explained that in the first half of 2023, the new energy automobile industry maintained rapid growth, and the company's new energy vehicle sales achieved strong growth on a high base in the same period last year, and its market share continued to increase, continuing to strengthen its leading position in the new energy automobile industry.

In addition, BYD also said that although the industry competition intensified in the first half of the year, the company continued to maintain a good level of profitability because of the company's own brand capabilities, the continuous expansion of its scale advantages and the cost control ability of the industrial chain, coupled with the decline in upstream raw material prices.

As BYD's financial report said, the advantage of scale is an important criterion for ensuring profits. According to BYD's first quarter report, BYD's gross profit margin is 17.86%, although lower than Tesla's gross profit margin of 19.34%, but the gap is further narrowing. It is also worth noting that Li Auto also achieved a profit of 930 million yuan in the first quarter, with a gross margin of 20.39%, but due to the problem of production capacity, there is still a huge gap between Li and BYD and Tesla.

According to the data, in the first six months of this year, BYD achieved sales of 1.2556 million new energy vehicles, a year-on-year increase of 95.78%; Tesla produced a total of 920,000 vehicles and delivered 889,000 vehicles in the first half of the year, a year-on-year increase of 57%; Li Auto, the leader of new automakers, sold 139,100 units in the first half of the year, a year-on-year increase of 130.31%.

It is not difficult to see from the above data that BYD has been in an absolute leading position in the domestic market, and from a global perspective, BYD's position is difficult to be shaken in a short period of time.

Previously, at BYD's shareholders' meeting, its chairman Wang Chuanfu said that the automotive industry has entered the knockout stage, and in the next three to five years, core technology, good strategic direction, and rapid decision-making mechanism are the keys to victory. Of course, Wang Chuanfu's words are definitely not alarmist, as early as when Lei Jun built the car, Wang Chuanfu reminded that the industry will change from a blue ocean to a red ocean, and after only one year, his words were verified.

At present, BYD is in the stage of capacity release, and its performance will also be reflected in the next few years, but it does not mean that BYD will sit back and relax. In addition to impeccable performance, BYD's potential risks include:

First, Buffett's continuous reduction. According to the data, as of the end of the first half of this year, Berkshire has reduced its holdings of BYD shares for the 12th time, and the proportion of BYD shares held by Berkshire has dropped from 9.21% to 8.98%.

According to statistics, Buffett's 12 reductions, the proportion of shares has dropped from the initial 20.04% to 8.98% today, the reduction is not small, roughly calculated Berkshire has cashed out nearly 27 billion Hong Kong dollars. Judging from Berkshire's current behavior, the future liquidation will be a high probability event, but BYD has digested it for a period of time, and it is not too far from the high point.

Second, the problem of new energy penetration. At present, the penetration rate of new energy in the domestic market has exceeded 30%, and the higher the penetration rate, the slower the sales of new energy vehicles. Although BYD is still "thriving" in the domestic market, its performance growth will also slow down in the future with the slowdown in sales.

Third, the development of foreign markets, for BYD, the domestic market has been stable, but the new breakthrough direction is still abroad, and the layout of overseas markets is related to future development, so if the overseas market expansion is not effective, then BYD's overall strategy will be greatly affected in the future. According to Huatai Securities, BYD's overseas sales will reach 300,000 units in 2023.

On the whole, Kanmi Finance believes that BYD's financial report forecast reflects the current status of the company, high-end and overseas layout may become the focus of BYD in the future, Buffett's reduction has been basically digested by the market, with the decline in upstream raw material prices, in the next three years, BYD's performance will be further released, when the concentration of the new energy market may be further strengthened, for the second and third tier new energy vehicle companies, may not be a good thing.