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BYD (002594): Looking for the strongest battery to find the best car; adding the new policy is good for BYD

22/03/2020 0 Comment

BYD (002594): Looking for the strongest battery to find the best car; adding the new policy is good for BYD

Company NewsCompany StatusThe new energy vehicle subsidy policy officially launched in 2019. The policy guidance ranges from finding the strongest battery to finding the best car, and from encouraging high endurance and high energy density to vehicle energy efficiency guidance, which is good for BYD.

  Comment on the 19-year subsidy policy which is positive for lithium iron phosphate batteries.

As for the subsidy for bicycle subsidence, the national compensation for 250-300km / 300-400km / 400km + cruising range of pure electric vehicles will be increased by 3 respectively.

4/4.

5/5 trillion 1.

8/1.

8/2.

50,000, with a decrease of 47% / 60% / 50%.

Below about 250-300km, the decline is the smallest.

As the current energy density of lithium iron phosphate batteries has exceeded 160Wh / kg and the cost advantage is obvious, in the case that the policy no longer gives higher compensation coefficients for batteries above 160Wh / kg, it is expected that some models will be re-adopted based on cost considerations.Lithium iron phosphate battery.
BYD has a significant lead in the lithium iron phosphate technology route, so it will benefit from the shift in complementary thinking.

  From finding the strongest battery to finding the best car.

The 19-year subsidy policy has changed from blindly pursuing advanced battery and guiding the optimization of the entire vehicle. For the model with a power consumption of 100 kilometers that allows the door performance to be 35% (25% in 2018), 1 is given.

1x reward.

We compared the current expected new energy model. The power consumption of 100 km for most models has not yet enabled 35% of the gate logic, but BYD has significantly focused on this (see Table 1).

We believe that with the advantages of Sanden Technology, the company will soon adjust the model’s energy efficiency to gradually reach a 10% excess subsidy.

  Pre-stage supplementary accelerated liquidation will continue to improve cash flow.

According to our calculations, the average value of BYD’s subsidies for new 杭州夜网 energy vehicles in the 16-18 years was in the tens of billions. Most of them were converted into accounts receivable, which caused a drag on cash flow. The company must increase financial leverage.

In the first three quarters of 2018, the company’s financial expenses were as high as 22 ppm.

With the implementation of the 19-year subsidy policy, the initial supplementary funds will be gradually liquidated and refunded, reducing cash pressure and reducing financial costs.

  It is estimated that in the short term, compensation for the decline will lead to a reduction in the company’s bicycle profits, but the sales volume will be sufficiently strong, the cost will decrease, and the price of some models will be raised, and financial pressure will be eased.

Currently BYD A / H corresponds to 31 respectively.

6x / 25.

5x 19P / E and 31.

5x / 25.

4x 20P / E.

We maintain the recommendation level and temporarily maintain the net profit forecast for 2019 and 2020 respectively at 47.

600 million and 47.

8 billion.

Maintain A / H target prices of 65 yuan and 70 Hong Kong dollars respectively, of which BYD A corresponds to 37 in 19/20.

1x / 37.

1x P / E; BYD H corresponds to 18/19 34.

3x / 34.

3 times price-earnings ratio; A / H is 17 compared with previous ones.

6% / 38.

9% upside.

  Risk New energy passenger car sales are lower than expected.