Stockhub

Editing BYD Company Limited

Warning: You are not logged in. Your IP address will be publicly visible if you make any edits. If you log in or create an account, your edits will be attributed to your username, along with other benefits.

The edit can be undone. Please check the comparison below to verify that this is what you want to do, and then publish the changes below to finish undoing the edit.

Latest revision Your text
Line 135: Line 135:


The batteries market is BYD's second major revenue stream. Although BYD started with batteries manufacturing, it has seen a great shift in recent years towards the EV market where business is much more profitable. Despite this, BYD remains a major player in the batteries market, cementing its place among well-known brands LG and Samsung. In July 2022, BYD overtook LG to become the second largest battery maker, with a market share of 16.1%, compared to LG's 11.1% and leader CATL's 33.4%. With the EV market rapidly growing and BYD contributing to energy storage projects all over the world, this market share is expected to grow further.
The batteries market is BYD's second major revenue stream. Although BYD started with batteries manufacturing, it has seen a great shift in recent years towards the EV market where business is much more profitable. Despite this, BYD remains a major player in the batteries market, cementing its place among well-known brands LG and Samsung. In July 2022, BYD overtook LG to become the second largest battery maker, with a market share of 16.1%, compared to LG's 11.1% and leader CATL's 33.4%. With the EV market rapidly growing and BYD contributing to energy storage projects all over the world, this market share is expected to grow further.
== BYD Competitors ==
'''1. Tesla, Inc. (Market Cap: 832.99 billion USD)'''
Tesla, Inc., founded in 2003 by Elon Musk and others, is a major American electric vehicle and clean energy company. Renowned for its innovative EVs, energy storage products, and solar energy solutions, Tesla poses a significant challenge to BYD in the global electric vehicle market.
'''2. NIO Inc. (Market Cap: 22.67 billion USD)'''
NIO Inc., a Chinese electric vehicle manufacturer founded in 2014, has gained prominence for producing high-performance electric SUVs and a strong focus on battery-swapping technology. NIO's emphasis on providing premium electric mobility experiences puts it in direct competition with BYD in the Chinese EV market.
'''3. Panasonic Corporation (Market Cap: 4.36 trillion JPY)'''
Panasonic Corporation, a Japanese multinational electronics company, is a significant competitor to BYD in the battery and energy storage sector. The company manufactures a wide range of batteries, including lithium-ion batteries used in electric vehicles, which puts it in competition with BYD's battery division.
'''4. LG Chem Ltd. (Market Cap: 46.45 trillion KRW)'''
LG Chem, a South Korean chemical company, is a key player in the global battery industry. Known for producing lithium-ion batteries used in electric vehicles, energy storage systems, and various other applications, LG Chem is a notable competitor to BYD in this area.
'''5. Samsung Electronics Co., Ltd. (Market Cap: 477.17 trillion KRW)'''
Samsung Electronics, a renowned South Korean multinational conglomerate, has been expanding its presence in the electric vehicle market. The company's investments in battery technologies and plans to develop electric vehicle components pose a potential challenge to BYD's battery and EV business.
'''6. Sony Corporation (Market Cap: 16.66 trillion JPY)'''
Sony Corporation, a Japanese multinational conglomerate, has also entered the electric vehicle market with the development of EV batteries. Sony's reputation for producing high-quality electronics and its recent ventures into the EV segment make it a potential rival to BYD.
'''7. General Motors Company (Market Cap: 54.67 billion USD)'''
General Motors (GM), a prominent American automaker, has been investing heavily in electric vehicles and plans to transition to an all-electric line-up in the coming years. As GM expands its EV offerings, it may compete with BYD in both domestic and international markets.
'''8. Volkswagen Group (Market Cap: 67.76 billion EUR)'''
Volkswagen Group, a German automotive giant, is another major player in the electric vehicle market. With its ambitious electrification plans and a portfolio of electric models across its brands, Volkswagen's global reach and well-established reputation pose a competitive challenge to BYD in various regions.
'''9. Toyota Motor Corporation (Market Cap: 37.86 trillion JPY)'''
Toyota Motor Corporation, a Japanese multinational automotive manufacturer, is one of the largest automakers in the world. Known for its extensive range of vehicles, including hybrid and electric models, Toyota poses a significant competitive challenge to BYD. The company's global presence, reputation for reliability, and focus on sustainable mobility solutions put it in direct competition with BYD in various markets.
'''10. Honda Motor Co., Ltd. (Market Cap: 8 trillion JPY)'''
Honda Motor Co., Ltd., another prominent Japanese automotive manufacturer, is recognized for its diverse lineup of automobiles and motorcycles. Honda has also made strides in the electric vehicle segment, developing hybrid and electric models that compete with BYD's offerings. The company's commitment to innovation and environmentally friendly technologies places it as a key rival to BYD in the automotive industry.
== BYD: On-going and future projects ==
== BYD: On-going and future projects ==
BYD has a number of on-going and future projects that are aimed at expanding its business and capturing new markets. These projects include:
BYD has a number of on-going and future projects that are aimed at expanding its business and capturing new markets. These projects include:
Line 411: Line 369:


=== Intense Competition in the Chinese Market: ===
=== Intense Competition in the Chinese Market: ===
The Chinese new energy vehicle market is experiencing rapid growth, attracting numerous players seeking to maximize their interests. Beijing Automotive Group, Geely, and other Chinese independent brands have made significant strides in developing EVs, posing a direct threat to BYD's market share. Additionally, well-established foreign automakers like Tesla, BMW, and Volkswagen, backed by substantial financial and technological resources, also compete for a share of this vast market. To stay ahead, BYD must not only focus on product quality but also refine its product after-sales and marketing strategies to retain customer loyalty and attract new buyers.
The Chinese new energy vehicle market is experiencing rapid growth, attracting numerous players seeking to maximize their interests. Beijing Automotive Group, Geely, and other Chinese independent brands have made significant strides in developing NEVs, posing a direct threat to BYD's market share. Additionally, well-established foreign automakers like Tesla, BMW, and Volkswagen, backed by substantial financial and technological resources, also compete for a share of this vast market. To stay ahead, BYD must not only focus on product quality but also refine its product after-sales and marketing strategies to retain customer loyalty and attract new buyers.


=== Subsidy-Driven Market Dynamics: ===
=== Subsidy-Driven Market Dynamics: ===
Government subsidies play a crucial role in the Chinese EV market, encouraging consumers to adopt eco-friendly vehicles. Although BYD has benefited from subsidies, it faces stiff competition from other brands, particularly Tesla, which has secured significant financial support from various countries. This is evident from the fact that over the past 20 years, Tesla has successfully obtained various government subsidies, including tax breaks, loans, and other incentives, adding up to nearly $3 billion. Additionally, in 2020, Tesla's eligibility for significant financial support in China is highlighted by the substantial 2.1 billion yuan subsidy it received exclusively for new energy vehicles. These subsidies have helped Tesla and other competitors narrow the advantage that BYD might have gained, making it imperative for BYD to rely on continuous innovation and improvement rather than relying solely on subsidies.
Government subsidies play a crucial role in the Chinese NEV market, encouraging consumers to adopt eco-friendly vehicles. Although BYD has benefited from subsidies, it faces stiff competition from other brands, particularly Tesla, which has secured significant financial support from various countries. These subsidies have helped Tesla and other competitors narrow the advantage that BYD might have gained, making it imperative for BYD to rely on continuous innovation and improvement rather than relying solely on subsidies.


=== Threats from Competitors: ===
=== Threats from Competitors: ===
While BYD has managed to establish a prominent position in the Chinese auto market, the emergence of new players, such as Great Wall Motor, poses a challenge to its dominance. Additionally, global automotive giants like Toyota, Honda, and General Motors have also made substantial investments in research and development of new energy vehicles, potentially overtaking BYD's technological leadership. Furthermore, BYD's strong emphasis on independent research, development, and innovation, there are certain disparities between their technology and some international counterparts. BYD has not been particularly successful in assimilating cutting-edge technologies from global sources. In comparison, Tesla has established partnerships with numerous companies, enabling it to benefit from collaborations. Notably, approximately 50% of Tesla's batteries are supplied by CATL and LG, while Nidec Corp provides the Tesla motor. These esteemed manufacturers have played a crucial role in elevating Tesla's vehicle quality to exceptional levels.
While BYD has managed to establish a prominent position in the Chinese auto market, the emergence of new players, such as Great Wall Motor, poses a challenge to its dominance. Additionally, global automotive giants like Toyota, Honda, and General Motors have also made substantial investments in research and development of new energy vehicles, potentially overtaking BYD's technological leadership. Furthermore, BYD must be vigilant about competitors leveraging scale effects to reduce unit product costs or undercutting prices to gain market share.


=== Patent Disputes: ===
=== Patent Disputes: ===
Line 427: Line 385:
== Financials ==
== Financials ==


=== Historical & Forward financials <ref name=":0">https://stockanalysis.com/stocks/byddf/forecast/</ref> ===
=== Historical & Forward financials ===
The revenue has grown rapidly since 2018 with the exception of 2019 where negative revenue (CNY -127.74B) and growth rate was observed (-1.78%). Analysts expect the revenue on average to be CNY 645.5B (2023), CNY 814.6B (2024) and CNY 938.0B (2025). This translates to average revenue growth of 52.2%, 26.2% and 15.2% respectively.
The revenue has grown rapidly since 2018 with the exception of 2019 where negative revenue (CNY -127.74B) and growth rates were observed (-1.78%). Analysts expect the revenue on average to be CNY 645.5B (2023), CNY 814.6B (2024) and CNY 938.0B (2025). This translates to average revenue growth of 52.2%, 26.2% and 15.2% respectively.  
  [[File:26 -1.png|none|thumb|1187x1187px]]
  [[File:26 -1.png|none|thumb|1187x1187px]]
Analysts predict that the revenue can optimistically grow up to 1.4T in 2024 and 2025. However, more pessimistic forecasts suggest that 2024 and 2025 may witness a negative growth of -10.6% and -23.7% respectively for the first time since 2019. On average, the revenue is expected to grow for the next three years but at a slower rate compared to the previous three years.  
Analysts predict that the revenue can optimistically grow up to 1.4T in 2024 and 2025. However, more pessimistic forecasts suggest that 2024 and 2025 may witness a negative growth of -10.6% and -23.7% respectively for the first time since 2019. On average, the revenue is expected to grow for the next three years but at a slower rate compared to the recent three years.  
[[File:26 -2.png|none|thumb|1116x1116px]]
[[File:26 -2.png|none|thumb|1116x1116px]]
The earnings per share and the respective growth rate has been very volatile since 2018. Analyst expect a more controlled constant growth over the next three years. Analysts expect the EPS, on average, to be CNY 8.77 (2023), CNY 12.07 (2024) and CNY 15.68 (2025). This translates to an average revenue growth of 53.7%, 37.5% and 30.0% respectively.  
The earnings per share and the respective growth rate has been very volatile since 2018. Analyst expect a more controlled constant growth over the next three years. Analysts expect the EPS, on average, to be CNY 8.77 (2023), CNY 12.07 (2024) and CNY 15.68 (2025). This translates to an average revenue growth of 53.7%, 37.5% and 30.0% respectively.  
  [[File:26-3.png|none|thumb|1154x1154px]]  
  [[File:26-3.png|none|thumb|1154x1154px]]  
For 2025, high EPS growth forecasts can be as steep as 90.9% whereas conservative EPS growth forecasts can be as low as -46.0%. The spread in analysts' expectations remains high for all the forecasted years just as with the revenue.
For 2025, high EPS growth forecasts can be as steep as 90.9% whereas low EPS growth forecasts can be as low as -46.0%. The spread in analysts' expectations remains high for all the forecasted years just as with the revenue.  
  [[File:26 -4.png|none|thumb|1212x1212px]]  
  [[File:26 -4.png|none|thumb|1212x1212px]]  
=== Financial Ratios ===
=== Financial Ratios ===
The following table summarises how the evolution of the key financial ratios since 2013. <ref name=":0" />
The following table summarises how the evolution of the key financial ratios since 2013.  
{| class="wikitable"
{| class="wikitable"
!Year
!Year
Line 571: Line 529:
|0.21%
|0.21%
|}
|}
Between 2021 and 2022, some of the financial ratios have changed drastically. The Debt/EBITDA ratio has decreased by 70% from 1.63 to 0.49 as the company's earnings has increased significantly in relation to its debt, putting the business in a better position to pay off the incurred debt. <ref>[https://www.investopedia.com/terms/d/debt_edbitda.asp#:~:text=Debt%2FEBITDA%E2%80%94earnings%20before%20interest,pay%20off%20its%20incurred%20debt. https://www.investopedia.com/terms/d/debt_edbitda.asp#:~:text=Debt%2FEBITDA%E2%80%94earnings%20before%20interest,pay%20off%20its%20incurred%20debt.]</ref>
The Debt/FCF ratio has also plummeted from 1.26 to 0.5 by 60%. This is another coverage ratios which reinforces that the cash generated by the company puts it in a healthy position to cover all its debt. <ref>https://www.investopedia.com/terms/c/cash-flowtodebt-ratio.asp</ref>
The return on equity has increased by 11.77% in 2022. Return on equity is the ratio of net income to shareholder's equity. Higher net income stems from the growth in revenue which ultimately increases the return on equity. <ref>https://www.investopedia.com/terms/r/returnonequity.asp</ref>
The significant growth in revenue over last year fuels the optimistic forecasts (for revenue and EPS) and the substantial changes observed in the financial ratios. The new product range offered by BYD to its customers that are looking for an affordable transition to electric vehicles, entry into the European market and government policies promoting the transition to sustainable transportation have been the fundamental driving factors in revenue growth observed since 2021. 


== Valuation ==
== Valuation ==


=== DCF ===
=== DCF ===
BYD Company is valued using a DCF (Discounted Cash Flow) model followed by relative valuation.
BYD Company is valued using a DCF (Discounted Cash Flow) model and relative valuation.


DCF model is used to value the company intrinsically by projecting its future cash flows. Different line items from the financial statements including revenue, taxes, EBIT, D&A, capex and changes in net working capital are forecasted using available values from the previous 5 years.  
DCF model is used to value the company intrinsically by projecting its future cash flows. Different line items from the financial statements including revenue, taxes, EBIT, D&A, capex and changes in net working capital are forecasted using available values from the previous 5 years.  
{| class="wikitable"
{| class="wikitable"
!HKD millions
! colspan="11" |DCF
|-
!$ million
!2016
!2017
!2018
!2018
!2019
!2019
!2020
!2020
!2021
!2021E
!2022
!2022E
!''2023E''
!2023E
!''2024E''
!2024E
!''2025E''
!2025E
!''2026E''
!''2027E''
|-
|-
|'''Revenue'''
|'''Revenue'''
|151,502
|100,207,703
|143,075
|102,650,614
|173,547
|121,790,925
|256,840
|121,778,117
|479,772
|153,469,184
|642,980
|171,539,037
|815,310
|191,736,481
|970,590
|214,312,024
|1,155,444
|239,545,668
|1,375,504
|267,750,386
|-
|-
|'''''% growth'''''
|'''''% growth'''''
|''0.00%''
|
|''-5.56%''
|2.44%
|''21.30%''
|18.65%
|''47.99%''
| -0.01%
|''86.80%''
|26.02%
|''34.02%''
|11.77%
|''26.80%''
|11.77%
|''19.05%''
|11.77%
|''19.05%''
|11.77%
|''19.05%''
|11.77%
|-
|-
|
|
Line 638: Line 588:
|-
|-
|'''EBIT'''
|'''EBIT'''
|14,671
|14,358,257
|5,099
|12,851,411
|11,123
|13,379,454
|5,073
|13,495,001
|22,435
|20,789,471
|31,053
|23,386,560
|42,574
|26,308,085
|57,351
|29,594,577
|61,471
|33,291,628
|64,741
|37,450,527
|-
|-
|'''''% margin'''''
|'''''% margin'''''
|
|14.33%
|''3.56%''
|12.52%
|''6.41%''
|10.99%
|''1.98%''
|11.08%
|''4.68%''
|13.55%
|''4.83%''
|12.49%
|''5.22%''
|12.49%
|''5.91%''
|12.49%
|''5.32%''
|12.49%
|''5.32%''
|12.49%
|-
|-
|
|
Line 674: Line 624:
|-
|-
|'''Taxes'''
|'''Taxes'''
|982
| -1,088,398
|354
| -703,705
|976
| -829,447
|664
| -312,274
|3,915
| -868,624
|4,330
| -823,894
|4,788
| -781,467
|5,295
| -741,226
|5,856
| -703,056
|6,476
| -666,852
|-
|-
|'''''% of EBIT'''''
|'''''% of EBIT'''''
|''6.69%''
| -7.58%
|''6.94%''
| -5.48%
|''8.77%''
| -6.20%
|''13.09%''
| -2.31%
|''17.45%''
| -4.18%
|''10.59%''
| -5.15%
|''10.59%''
| -5.15%
|''10.59%''
| -5.15%
|''10.59%''
| -5.15%
|''10.59%''
| -5.15%
|-
|-
|
|
Line 710: Line 660:
|-
|-
|'''EBIAT'''
|'''EBIAT'''
|13,689
|13,269,859
|4,745
|12,147,706
|10,147
|12,550,007
|4,409
|13,182,727
|18,520
|19,920,847
|26,723
|22,562,666
|37,786
|25,526,618
|52,056
|28,853,351
|55,615
|32,588,572
|58,265
|36,783,675
|-
|-
|
|
Line 734: Line 684:
|-
|-
|'''D&A'''
|'''D&A'''
|11,165
|7,027,569
|11,158
|7,092,495
|14,067
|9,426,520
|17,004
|9,840,129
| -
|12,518,675
|19,641
|13,467,585
|21,108
|14,488,422
|22,686
|15,586,638
|24,381
|16,768,098
|26,204
|18,039,113
|-
|-
|'''''% of sales'''''
|'''''% of sales'''''
|''7.37%''
|7.01%
|''7.80%''
|6.91%
|''8.11%''
|7.74%
|''6.62%''
|8.08%
|''-''
|8.16%
|''7.47%''
|7.58%
|''7.47%''
|7.58%
|''7.47%''
|7.58%
|''7.47%''
|7.58%
|''7.47%''
|7.58%
|-
|-
|
|
Line 770: Line 720:
|-
|-
|'''Capex'''
|'''Capex'''
| -113,330
|12,384,399
| -45,007
|14,191,948
| -13,230
|18,452,645
| -23,389
|19,455,153
| -21,133
|12,565,583
|(15,748)
|14,211,647
|(11,736)
|16,073,341
|(8,746)
|18,178,913
|(6,517)
|20,560,310
|(4,857)
|23,253,666
|-
|-
|'''''% of slaes'''''
|'''''% of slaes'''''
|''-74.80%''
|12.36%
|''-31.46%''
|13.83%
|''-7.62%''
|15.15%
|''-9.11%''
|15.98%
|''-4.40%''
|8.19%
|''-25.48%''
|13.10%
|''-25.48%''
|13.10%
|''-25.48%''
|13.10%
|''-25.48%''
|13.10%
|''-25.48%''
|13.10%
|-
|-
|
|
Line 806: Line 756:
|-
|-
|'''Changes in NWC'''
|'''Changes in NWC'''
|114,906
|
|53,277
| -14,006,913
|24,093
|966,425
| -1,849
|147,139
| -5,741
|6,236,756
| -6,447
|6,101,620
| -7,240
|5,969,413
| -8,131
|5,840,070
| -9,131
|5,713,530
| -10,254
|5,589,731
|-
|-
|'''''% of sales'''''
|'''''% of sales'''''
|''75.84%''
|
|''37.24%''
| -13.65%
|''13.88%''
|0.79%
|''-0.72%''
|0.12%
|''-1.20%''
|4.06%
|''12.30%''
| -2.17%
|''12.30%''
| -2.17%
|''12.30%''
| -2.17%
|''12.30%''
| -2.17%
|''12.30%''
| -2.17%
|-
|-
|
|
Line 842: Line 792:
|-
|-
|'''Unlevered FCF'''
|'''Unlevered FCF'''
| -203,382
|7,913,029
| -82,381
|19,055,166
| -13,109
|2,557,457
| -127
|3,420,564
|3,128
|13,637,183
|37,063
|15,716,984
|54,399
|17,972,286
|74,127
|20,421,006
|82,610
|23,082,830
|89,866
|25,979,391
|}
|}
These parameters are used to calculate the cost of equity (9.51%) using the CAPM (Capital Asset Pricing Model). The cost of debt (5.4%) is also estimated using analysts' expectations.


The resulting WACC (Weighted Average Cost of Capital) calculated internally is 9.51%. WACC is used as the discounting factor in order to project the calculated free cash flows and the terminal value to its respective present value.  
These parameters are used to calculate the cost of equity (7.4%) using the CAPM (Capital Asset Pricing Model). The cost of debt (5.0%) is also estimated using analyst’s expectations.
 
The resulting WACC (Weighted Average Cost of Capital) calculated internally is 7.4%. This is in line with the analyst’s expectations. WACC is used as the discounting factor in order to project the calculated free cash flows and the terminal value to its respective present value.  


The terminal growth rate is estimated to be 1.0% in order to obtain the terminal value. The enterprise value is obtained by summing the present value of free cash flow forecasts and the terminal value. Net debt is deducted from the enterprise value to obtain the equity value.
The terminal growth rate is estimated to be 5.0% in order to obtain the terminal value. The enterprise value is obtained by summing the present value of free cash flow forecasts and terminal value. Net debt is deducted from the enterprise value to reach the equity value.
{| class="wikitable"
{| class="wikitable"
!Assumptions
!Value
!Explaination
|-
|'''Risk free rate  (5 year US Bond)'''
|'''Risk free rate  (5 year US Bond)'''
|4.7%
|4.20%
|US 5 Year Treasury Note rate <ref name=":1">https://valueinvesting.io/BYD/valuation/wacc</ref>
|-
|-
|'''Market risk premium'''
|'''Market risk premium'''
|5.2%
|5.00%
|Analysts' expectations <ref name=":1" />
|-
|-
|'''Levered beta'''
|'''Levered beta'''
|0.88
|0.64
|Analysts' expectations <ref name=":1" />
|-
|-
|
|
|
|
|
|-
|-
|'''Cost of equity'''
|'''Cost of equity'''
|9.8%
|7.40%
|CAPM (Capital Asset Pricing Model)
|-
|-
|'''Cost of debt'''
|'''Cost of debt'''
|5.4%
|5.00%
|Analysts' expectations <ref name=":1" />
|-
|-
|
|'''Share price (as of 05/07/2023)'''
|
|67.94
|
|-
|-
|'''Shares outstanding (latest reported)'''
|'''Shares outstanding (latest reported)'''
|2.9 B
|2,861,142,855
|BYD 2022 interim report <ref>https://www.bydglobal.com/sitesresources/common/tools/generic/web/viewer.html?file=%2Fsites%2FSatellite%2FBYD%20PDF%20Viewer%3Fblobcol%3Durldata%26blobheader%3Dapplication%252Fpdf%26blobkey%3Did%26blobtable%3DMungoBlobs%26blobwhere%3D1600575229843%26ssbinary%3Dtrue</ref>
|-
|-
|'''Market capitalization'''
|'''Market capitalization'''
|789,501 <ref>https://finance.yahoo.com/quote/1211.HK/key-statistics/</ref>
|1.94E+17
|
|-
|-
|'''Total debt'''
|'''Internally calculated WACC'''
|39,956
|7.40%
|
|-
|-
|'''Total capital'''
|'''Terminal growth rate'''
|829,458
|5.00%
|
|}
|-
All financial figures are often reported in Chinese Yuan for BYD as a Chinese company. As per the currency exchange rate on 22/07/23, 1 Chine Yuan Renminbi was equivalent to 0.14 US Dollars.
|'''% debt capital'''
 
|4.82%
The implied share price for BYD Company is $57.88 (¥ 413.45), while the closing share price on 21/07/23 was $68.11  (¥489.56).
|
{| class="wikitable"
|-
|'''Equity Value'''
|'''% equity capital'''
|1,182,930,437
|95.18%
|
|-
|'''Terminal growth rate'''
|1%
|Analysts' expectations <ref name=":1" />
|-
|-
|'''Tax rate'''
|'''Implied Share Price'''
|22.50% <ref name=":1" />
|$ 57.88
|
|-
|-
|
|'''Current Share Price'''
|
|$ 68.11
|
|-
|'''Internally calculated WACC'''
|9.51%
|
|}
|}
All financial figures for the DCF are reported in HKD (Hong Kong Dollar). As per the currency exchange rate on 28/07/23, 1 HKD is equivalent to 0.13 US Dollars. <ref>https://www.xe.com/currencyconverter/convert/?Amount=1&From=HKD&To=USD</ref>
Sensitivity analysis is conducted to investigate the impact of WACC fluctuating between 6.0% and 9.0% and terminal growth rate between 3.5% and 6.0%.
 
The implied share price for BYD Company is $44.13 (HK$ 344.24), while the closing share price on 28/07/23 was $34.77 (HK$ 271.20).
{| class="wikitable"
{| class="wikitable"
|'''Present vale of FCF'''
! colspan="2" rowspan="2" |
|262,479
! colspan="7" |WACC
|-
|-
|'''Present value of TV'''
!'''6.00%'''
|710,899
!'''6.50%'''
!'''7.00%'''
!'''7.40%'''
!'''8.00%'''
!'''8.50%'''
!'''9.00%'''
|-
|-
|
! rowspan="6" |Terminal
|
Growth Rate
!'''3.5%'''
|$86.86
|$72.93
|$62.96
|$56.81
|$49.62
|$44.93
|$41.07
|-
|-
|'''Enterprise value'''
!'''4.0%'''
|973,378
|$108.12
|$87.17
|$73.18
|$64.94
|$55.64
|$49.76
|$45.05
|-
|-
|'''Net debt'''
!'''4.5%'''
| -28,746
|$143.56
|$108.54
|$87.49
|$75.86
|$63.37
|$55.81
|$49.91
|-
|-
|
!'''5.0%'''
|
|$214.44
|$144.14
|$108.96
|$91.34
|$73.69
|$63.58
|$55.98
|-
|-
|'''Equity value'''
!'''5.5%'''
|100,2124
|$427.07
|$215.36
|$144.73
|$114.96
|$88.13
|$73.95
|$63.79
|-
|-
|'''Shares'''
!'''6.0%'''
|2.9 B
|#DIV/0!
|-
|$428.99
|
|$216.28
|
|$155.46
|-
|$109.80
|'''Current share price (HKD)'''
|$88.46
|271.20
|$74.20
|-
|}
|'''Current share price ($)'''
 
|34.77
=== Relative Valuation ===
|-
 
|'''Implied share price (HKD)'''
Trading comparable analysis was used to compare BYD company to its competitors in the market. A range of different multiples are used to evaluate the current share price of BYD company.
|344.24
|-
|'''Implied share price ($)'''
|44.13
|}


Sensitivity analysis is conducted to investigate the impact of WACC ranging from 6.5% and 10.0% and terminal growth rate between 0% and 2.5%.
{| class="wikitable"
! rowspan="8" |Terminal
Growth Rate
! colspan="10" |WACC
|-
|
|'''6.50%'''
|'''7.00%'''
|'''7.50%'''
|'''8.00%'''
|'''9.51%'''
|'''8.50%'''
|'''9.00%'''
|'''9.50%'''
|'''10.00%'''
|-
|'''0.0%'''
|$465.53
|$431.79
|$402.57
|$377.02
|$316.39
|$354.50
|$334.49
|$316.61
|$300.53
|-
|'''0.5%'''
|$497.33
|$458.61
|$425.44
|$396.72
|$329.54
|$371.60
|$349.45
|$329.79
|$312.20
|-
|'''1.0%'''
|$534.92
|$489.90
|$451.83
|$419.22
|'''$344.24'''
|$390.98
|$366.28
|$344.51
|$325.17
|-
|'''1.5%'''
|$580.03
|$526.88
|$482.62
|$445.19
|$360.77
|$413.13
|$385.36
|$361.08
|$339.66
|-
|'''2.0%'''
|$635.16
|$571.26
|$519.01
|$475.49
|$379.51
|$438.69
|$407.16
|$379.85
|$355.97
|-
|'''2.5%'''
|$704.07
|$625.50
|$562.68
|$511.30
|$400.92
|$468.50
|$432.31
|$401.30
|$374.45
|}
=== Relative Valuation ===
Trading comparable analysis was used to compare BYD to its competitors in the market. A range of different multiples are used to evaluate if the current share price of BYD is fairly priced or under/overvalued . <ref>https://www.alphaspread.com/security/hkex/1211/relative-valuation</ref>
{| class="wikitable"
{| class="wikitable"
!Company
!Company
!Market Cap
!P/S
!P/S
!P/E
!P/E
!EV/EBITDA
!EV/EBITDA
!EV/EBIT
!EV/EBIT
!PEG
!Growth adjusted EV/EBITDA
|-
|-
|'''BYD Co'''
|'''BYD Co'''
|'''1.6'''
|763B
|'''38.0'''
|1.6
|'''29.5'''
|38.2
|'''29.5'''
|29.7
|'''21.8'''
|29.7
|'''8.7'''
|-
|-
|Tesla
|'''Tesla'''
|8.9
|823B
|68.2
|9.6
|48.8
|69.8
|64.7
|47.5
|128.7
|61.9
|55.5
|-
|-
|Toyota
|'''Toyota'''
|31T
|0.8
|0.8
|12.8
|12.7
|9.2
|9.1
|16.1
|15.9
|58.2
| -460.0
|-
|-
|Porsche  
|'''Porsche'''
|101B
|1.8
|1.8
|13.3
|13.4
|6.8
|6.9
|9.4
|9.5
|443.3
|170.0
|-
|-
|Mercedes Benz
|'''Mercedes Benz'''
|76.1B
|0.5
|0.5
|5.2
|5.1
|4.5
|4.5
|6.1
|6.1
| -130.0
|64.3
|-
|-
|Audi AG
|'''Audi AG'''
|83.4B
|1.4
|1.4
|11.4
|11.3
|10.4
|10.2
|10.4
|10.2
| -
| -
|-
|-
|Volkswagen
|'''Volkswagen'''
|0.2
|73.7B
|5.7
|0.3
|2.6
|5.9
|6.3
|2.7
|95.0
|6.5
| -37.1
|-
|-
|Ferrari
|'''Ferrari'''
|13.4
|70.2B
|72.2
|13.2
|38.7
|70.9
|56.0
|38
|141.6
|55
|82.3
|-
|-
|BMW
|'''BMW'''
|69B
|0.5
|0.5
|6.3
|6.2
|4.0
|3.9
|6.3
|6.2
| -14.7
|30.8
|-
|-
|Daimler
|'''Daimler'''
|67.4B
|0.4
|0.4
|3.7
|3.7
|4.0
|4
|5.4
|5.4
|2.5
| -
|-
|-
|Stellantis
|'''Stellantis'''
|51.9B
|0.3
|0.3
|3.7
|3.4
|1.1
|0.9
|1.5
|1.2
|0.1
|26%
|-
|-
|
| colspan="6" |
|
|
|
|
|
|
|-
|-
|'''Median'''
|'''Median'''
|'''0.7'''
|74.9
|'''8.9'''
|0.65
|'''5.7'''
|8.75
|'''7.9'''
|5.7
|'''58.2'''
|8
|'''43.1'''
|-
|-
|Mean
|'''Mean'''
|2.8
|3241.57
|20.3
|2.88
|13.0
|20.24
|18.2
|12.77
|80.5
|17.79
| -11.8
|-
|-
|Lower Quartile
|'''Lower Quartile'''
|0.4
|69.3
|0.425
|5.3
|5.3
|4.0
|3.925
|6.2
|6.125
|0.1
| -9.1
|-
|-
|Upper Quartile
|'''Upper Quartile'''
|96.6
|1.7
|1.7
|13.2
|13.225
|10.1
|9.925
|14.7
|14.475
|128.7
|68.8
|-
|Min
|0.2
|3.7
|1.1
|1.5
| -130.0
| -460.0
|-
|Max
|13.4
|72.2
|38.7
|56.0
|443.3
|170.0
|}
|}
The valuation multiples are expressed in the bar charts with the industry median and the respective value for BYD. [[File:EV-EBIT 25-07.png|thumb|1778x1778px|none]]


The valuation multiples are expressed in the bar charts with the industry median and the value of the respective multiple for BYD, highlighted using a dotted line. 
EV/EBIT – The ratio evaluated the enterprise value of the company (considering all debts and liabilities) with respect to the operating earnings of the company. The average EV/EBITDA ratio in the industry is 8 while the EV/EBITDA ratio of BYD is 29.7. A high EV/EBITDA ratio suggests an overvaluation.  [[File:P-S 25-07.png|thumb|1111x1111px|
 
'''EV/EBIT'''
[[File:28 - 1.png|none|thumb|1115x1115px]]
EV/EBIT – The ratio evaluates the enterprise value of the company (considering all debts and liabilities) with respect to the operating earnings of the company. The average EV/EBITDA ratio in the industry is 7.9 while the EV/EBITDA ratio of BYD is 29.5. A high EV/EBITDA ratio implies an overvaluation. <ref>https://www.investopedia.com/terms/e/ebit-ev-multiple.asp</ref>
'''P/S'''
[[File:28-2.png|none|thumb|1077x1077px]]
<big>P/S – Price to Sales ratio evaluates how much an investor values each dollar of sale generated by the company. The average P/S ratio in the industry is 0.7 while the P/S ratio of BYD is 1.6. A high P/S ratio suggests that the investors are willing to pay a higher price per dollar of sale generated implying an overvaluation.</big> <ref>https://www.investopedia.com/terms/p/price-to-salesratio.asp</ref>
 




'''EV/EBITDA'''
|none]]<big>P/S – Price to Sales ratio evaluates how much an investor values each dollar of sale generated by the company. The average P/S ratio in the industry is 0.65 while the P/S ratio of BYD is 1.6. A high P/S ratio suggests that the investors are willing to pay a higher price per dollar of sale generated implying an overvaluation.</big>[[File:EV-EBITDA - 25-07.png|thumb|1224x1224px|none]]EV/EBITDA – The ratio evaluates the enterprise value of the company (considering all debts and liabilities) with respect to the operating performance of the company. The average EV/EBITDA ratio in the industry is 5.7 while the EV/EBITDA ratio of BYD is 29.7. A high EV/EBITDA ratio suggests an overvaluation.  [[File:P-E 25-07.png|thumb|1073x1073px|none]]                        
 
[[File:28-3.png|none|thumb|1081x1081px]]
P/E – Price to Earnings ratio shows how much an investor is willing to pay per dollar of earnings generated. It portrays an investor’s expectation of the future earnings of the company. The average P/E ratio in the industry is 8.75 while the P/S ratio of BYD is 38.2. A high P/E ratio suggests that the investors are willing to pay a higher price per dollar of EPS generated implying an overvaluation.
EV/EBITDA – The ratio evaluates the enterprise value of the company (considering all debts and liabilities) with respect to the operating performance of the company. The average EV/EBITDA ratio in the industry is 5.7 while the EV/EBITDA ratio of BYD is 29.5. A high EV/EBITDA ratio suggests an overvaluation.  <ref>https://www.investopedia.com/terms/e/ev-ebitda.asp</ref> 
 
'''P/E'''
[[File:28-5.png|none|thumb|1164x1164px]]
P/E – Price to Earnings ratio shows how much an investor is willing to pay per dollar of earnings generated. It portrays an investor’s expectation of the future earnings of the company. The average P/E ratio in the industry is 8.9 while the P/S ratio of BYD is 38.0. A high P/E ratio suggests that the investors are willing to pay a higher price per dollar of EPS generated implying an overvaluation. <ref>https://www.investopedia.com/terms/p/price-earningsratio.asp</ref>
'''PEG'''
[[File:28-4.png|none|thumb|1226x1226px]]
PEG is the ratio of P/E to the growth rate of earnings. A PEG ratio greater than 1 indicates that the stock is overvalued while a PEG ratio smaller than 1 indicates the stock is undervalued. As a result of high earnings forecasts for BYD, the PEG ratio for BYD (21.8) is noticeably lower than the industry median (58.2). <ref>https://www.investopedia.com/terms/p/pegratio.asp</ref>
'''Growth Adjusted EV/EBITDA'''
[[File:28-6.png|none|thumb|1235x1235px]]
The growth adjusted EV/EBITDA is the ratio of EV/EBITDA to the growth in EBITDA. The growth adjusted EV/EBITDA for BYD (8.7) is noticeably smaller than the industry median (43.1).
 
== ESG Factors ==
== ESG Factors ==


Line 1,274: Line 1,080:
== Appendix ==
== Appendix ==


=== Income Statement <ref>https://www.wsj.com/market-data/quotes/BYDDF/financials/annual/income-statement</ref> ===
=== Income Statement ===
{| class="wikitable"
{| class="wikitable"
!Fiscal year is February-January. All values HKD Millions.
!Fiscal year is February-January. All values HKD Millions.
Line 1,346: Line 1,152:
| -
| -
|-
|-
!Gross Income
|Gross Income
!66779
|66779
!27443
|27443
!29162
|29162
!19611
|19611
!20880
|20880
|-
|-
|Gross Income Growth
|Gross Income Growth
Line 1,402: Line 1,208:
|1617
|1617
|-
|-
!EBIT
|EBIT
!22435
|22435
!5073
|5073
!11123
|11123
!5099
|5099
! -
| -
|-
|-
|Unusual Expense
|Unusual Expense
Line 1,521: Line 1,327:
|919
|919
|-
|-
!Net Income
|Net Income
!19330
|19330
!3670
|3670
!4758
|4758
!1831
|1831
!3293
|3293
|-
|-
|Net Income Growth
|Net Income Growth
Line 1,598: Line 1,404:
|2728
|2728
|-
|-
!EBITDA
|EBITDA
!46123
|46123
!22076
|22076
!25190
|25190
!16257
|16257
!17281
|17281
|-
|-
|EBITDA Growth
|EBITDA Growth
Line 1,620: Line 1,426:
|}
|}


=== Balance Sheet <ref>https://www.wsj.com/market-data/quotes/BYDDF/financials/annual/balance-sheet</ref> ===
=== Balance Sheet ===
{| class="wikitable"
{| class="wikitable"
!Fiscal year is February-January. All values HKD Millions.
!Fiscal year is February-January. All values HKD Millions.
Line 1,923: Line 1,729:
|81
|81
|-
|-
!Total Assets
|Total Assets
!557196
|557196
!362922
|362922
!239130
|239130
!219439
|219439
!222896
|222896
|-
|-
|Assets - Total - Growth
|Assets - Total - Growth
Line 2,105: Line 1,911:
|1591
|1591
|-
|-
!Total Liabilities
|Total Liabilities
!420907
|420907
!229922
|229922
!161318
|161318
!151833
|151833
!155934
|155934
|-
|-
|Non-Equity Reserves
|Non-Equity Reserves
Line 2,203: Line 2,009:
|6267
|6267
|-
|-
!Total Equity
|Total Equity
!136289
|136289
!127518
|127518
!75121
|75121
!65110
|65110
!64770
|64770
|-
|-
|Liabilities & Shareholders' Equity
|Liabilities & Shareholders' Equity
Line 2,217: Line 2,023:
|222896
|222896
|}
|}
=== Cash Flow Statement <ref>https://www.wsj.com/market-data/quotes/BYDDF/financials/annual/cash-flow</ref> ===
=== Cash Flow Statement ===
{| class="wikitable"
{| class="wikitable"
!Fiscal year is February-January. All values HKD Millions.
!Fiscal year is February-January. All values HKD Millions.
Please note that all contributions to Stockhub may be edited, altered, or removed by other contributors. If you do not want your writing to be edited mercilessly, then do not submit it here.
You are also promising us that you wrote this yourself, or copied it from a public domain or similar free resource (see Stockhub:Copyrights for details). Do not submit copyrighted work without permission!
Cancel Editing help (opens in new window)

Templates used on this page:

Retrieved from ‘https://stockhub.co/research/BYD_Company_Limited’