The market value has evaporated by more than 400 billion! BYD, the "king of sales", urgently needs a "new story"

The "price butcher" BYD once again opened the price reduction mode.

On November 23, BYD launched a large-scale direct price reduction strategy, involving a number of models under Dynasty Network. Some dealers said that BYD's Qin, Han, Tang, Song and other models have increased the cash discount range to 3,000 yuan to 10,000 yuan.

It is reported that at the beginning of November, BYD had just carried out a price reduction promotion, and now it has been reduced again less than a month apart, which shows BYD's determination to sprint to the annual sales target of 3 million.

However, compared to the consumer market, the capital market is divided. On the first trading day after the official price cut, BYD's share price fell by 5.24%, and its market value shrank to 34.8 billion in one day, and the total market value fell to 631.3 billion.

According to Kanjian Finance, in the past year or so, as BYD's sales have continued to rise, its stock price has not received correct feedback. As of the close of trading on November 24, BYD's share price closed at 216.85 yuan / share, compared with the high point of 357.61 yuan / share in June 2022, BYD's share price has fallen by more than 30%, and its market value has shrunk by more than 400 billion.

But if compared to Tesla, BYD's stock price is also strong. In the long run, with the continuous improvement of the penetration rate of new energy, how to continue to maintain the sales advantage and improve the gross profit margin is a problem that BYD must consider.

Sales to the left, stock prices to the right

In October, BYD's sales reached 301,800 units, which was the first time that BYD's monthly sales exceeded 300,000 units.

How exaggerated is it to sell more than 300,000 units in a single month?

As the sales champion of the new car-making force, Li Auto's sales in October only stood at the 40,000 mark, although it is already very good, but it is only one-seventh of BYD's sales in October, and the cumulative sales of Li Auto in the first ten months of this year were a total of 284,600 units. In comparison, it can be seen how big BYD's current lead is.

In addition, BYD's cumulative sales in the first ten months of this year were 2.3115 million units, and according to media statistics, domestic sales of new energy vehicles in the first ten months of this year were 7.28 million units, of which 6.285 million were sold domestically and 995,000 were exported. Even according to the total sales data of 7.28 million units, BYD accounted for 31.75% of all new energy vehicle sales, in other words, for every 10 new energy vehicles sold this year, 3 were BYD's.

With the continuous increase in sales, BYD's performance has also ushered in an explosion. According to the financial report, in the first three quarters of this year, BYD achieved a cumulative revenue of 422.3 billion, a year-on-year increase of 57.75%, and a cumulative net profit of 21.37 billion, a year-on-year increase of 129.47%. Judging from the profit margin data, BYD's gross profit margin and net profit in the first three quarters of this year hit a new high, reaching 19.79% and 5.29% respectively, you must know that two years ago, these two data were 12.97% and 2.27% respectively.

It is worth noting that although BYD's sales and performance are constantly hitting new highs, its stock price has not correctly reflected BYD's intrinsic value. As early as before BYD's share price fell, many institutions had begun to reduce BYD's positions. For example, Warren Buffett, the "god of stocks", began to reduce his holdings of BYD as early as August last year, and by November 1 this year, the cumulative number of reductions had reached 13 times, and the shareholding ratio had fallen from 19.92% to less than 8% today, and from the perspective of institutional holdings, as of September 30, the number of BYD's institutional holdings was 365, a decrease of 289 from 634 in the same period last year.

So why is this happening? It's a question worth pondering.

New stories are urgently needed

For BYD, if it wants to get out of the "strange circle" of sales and stock prices, it must "break through".

In terms of technology, although BYD attaches great importance to technology and has an absolute advantage in R&D investment - BYD's R&D expenses in the first three quarters of this year have reached 24.938 billion, a significant increase of 129.42% compared with the same period last year, but BYD's technology investment is mainly used in hardware, and investment in the direction of intelligence should also be increased.

In April this year, Wang Chuanfu bluntly said in public that "autonomous driving is just an advanced assisted driving coerced by capital", which conveys BYD's attitude towards intelligence and autonomous driving.

In the external publicity, the main selling point of BYD's products is also on the appearance, fuel consumption, brand influence, etc., and the actual publicity of intelligence is not particularly sufficient.

In terms of high-end, as more and more car companies begin to make efforts in the direction of high-end new energy vehicles, BYD's high-end transformation is not all smooth sailing. Taking its premium brand DENZA as an example, the sales volume of the DENZA N7 in August, September and October were only 1,480, 1,810 and 1,079 units, respectively, while the sales of the DENZA N8 were also 358 units. For BYD, although the sales myth of the Denza D9 has been staged, the sales of the Denza N7 and N8 also show that the high-end transformation is not an easy task.

In terms of internationalization, according to the data, BYD's overseas sales in the third quarter were 71,000 units, an increase of 100% from 36,000 units in the second quarter, and the proportion of overseas sales also increased from 4.2% in June to 9.8% in September. However, at present, BYD's focus is mainly on Southeast Asia and the Brazilian market, and such an important market as Europe has not been opened because of the EU's anti-subsidy investigation, and BYD is obviously still far away from becoming a giant like Tesla and Toyota.

In this round of vehicle electrification, the first half is electrified, and the second half is intelligent.

There is no doubt that BYD has delivered a perfect answer in the electrification transformation with sales of more than 200,000 per month, but if it wants to continue to maintain its advantage in the second half, in addition to sales, BYD needs to continue to break through and break through the high-end barrier.