BYD Company Limited

BYD Company

Logo since 2022
Type	Public
Traded as	SEHK: 1211 SZSE: 002594
Industry	Conglomerate
Founded	February 1995 (1995-02)
Founder	Wang Chuanfu
Headquarters	Shenzhen, Guangdong , China
Area served	Worldwide
Key people	Wang Chuanfu (Chairman, CEO)
Products	Gasoline and electric cars, battery-powered bicycles, buses, trucks, forklifts, monorail train and buses, photovoltaic modules (solar panels), face masks, rechargeable batteries, and handset components.
Revenue	RMB 424 billion (2022)
Net income	RMB 16.6 billion (2022)
Total assets	RMB 295.78 billion (2021)
Total equity	RMB 104.24 billion (2021)
Owner	Amirali Tabatabaei (17.6%) Lu Xiangyang (13.5%) Berkshire Hathaway (9.8%) Li Lu (8.2%) Western Capital Group (7.7%) Youngy Investment (5.3%) The Vanguard Group (2.1%) BlackRock (1.9%) Dimensional Fund Advisors (0.64%) Shanghai Samsung Semiconductor (0.3%)
Number of employees	c.288,200 (2021)
Subsidiaries	BYD Auto BYD Electronic
Website	www.byd.com

BYD Company Limited, together with its subsidiaries, engages in the research, development, manufacture, and sale of automobiles and related products in the People's Republic of China and internationally. It operates through three segments: Rechargeable Batteries and Photovoltaic Products; Mobile Handset Components, Assembly Service and Other Products; and Automobiles and Related Products and Other Products. The company offers internal combustion, hybrid, and battery-electric passenger vehicles; buses, coaches, and taxis; logistics, construction, and sanitation vehicles; and vehicles for warehousing, port, airport, and mining operations. It also manufactures and sells lithium-ion and nickel batteries, photovoltaic products, and iron batteries primarily for mobile phones, electric tools, and other portable electronic instruments; mobile handset components, such as housings and electronic components; medical protection products; and automobiles, and auto-related molds and components, as well as provides assembly, and automobiles leasing and after sales services. In addition, it offers rail transit equipment; solar batteries and arrays; and urban rail transportation services. The company was founded in 1995 and is headquartered in Shenzhen, China.

The Idea

BYD Company Ltd. was founded by Wang Chuanfu, a chemist and government researcher, in 1995. The idea for the company came about when Wang Chuanfu identified the future potential of rechargeable batteries, a market which was then dominated by Japanese companies

Initially focusing on batteries for mobile phones and digital cameras, BYD's breakthrough came when it entered the rapidly growing automobile industry. Recognizing the environmental implications of traditional fuel vehicles, BYD made the strategic decision to delve into electric vehicles (EVs) and became a pioneer in this sector.

The company introduced the world's first plug-in hybrid vehicle, the F3DM, in 2008. As the demand for cleaner energy alternatives grew, BYD expanded its operations further into the realm of electric buses, taxis, trucks, and forklifts. Today, BYD is a world leader in electric vehicle and battery technology, guided by its mission "to change the world by creating a complete, clean-energy ecosystem."

Mission Statement

BYD's mission statement is:

"BYD’s (Build Your Dreams) mission is to change the world through technological innovation that reduces greenhouse gasses and our dependency on fossil fuels.

This mission reflects BYD's commitment to driving innovation in battery technology and promoting sustainable development.

Segments covered by BYD

Electric Vehicles

BYD is a leading player in the global electric vehicle market, manufacturing a diverse range of products including electric cars, buses, trucks, and taxis. The company is well-known for its proprietary battery technology, which gives its electric vehicles a competitive edge in terms of range and efficiency.

Renewable Energy

BYD has established itself in the renewable energy sector with solutions such as solar panels, energy storage systems, and rail transit. The company's renewable energy products are crucial components of its broader vision for a clean-energy ecosystem.

Batteries and Energy Storage

As a top manufacturer of rechargeable batteries, BYD's products are used in a wide array of applications, from mobile phones and laptops to electric vehicles and energy storage systems. The company's cutting-edge battery technology is a key component of its success in the electric vehicle market.

Mobile Components

BYD also operates in the electronics industry, supplying components for mobile phones, computers, and other digital devices. The company's clients include major global tech companies.

Automotive Components and Assembly

BYD has significant operations in automotive parts manufacturing and assembly, supplying a wide range of components to both its own vehicle division and other automobile manufacturers.

Others

Other sectors BYD is involved in include rail transit and LED lighting. The company also has significant investments in semiconductor technologies, a critical element for the development of its electric vehicles and renewable energy products.

In summary, BYD Company Ltd. represents a diverse conglomerate operating primarily in the electric vehicle and renewable energy sectors, while also maintaining significant operations in batteries, mobile components, and automotive parts. The company's mission and strategic focus on sustainability and innovation have positioned it as a leader in the global transition towards cleaner energy technologies.

Revenue Breakdown by Segment

As of the first half of 2022, BYD Group reported a total revenue of approximately RMB 150,607 million, representing a significant year-on-year increase of 65.71%. The revenue was generated from various business segments, with notable variations in their contributions.

Automobiles and Related Products Segment

The "Automobiles and Related Products" segment remains a core focus for BYD Group and is a pioneer and leader in the new energy vehicle industry. In the first half of 2022, this segment generated approximately RMB 109,267 million in revenue, representing a substantial year-on-year increase of 130.31%. The success of this segment can be attributed to BYD's commitment to technological innovation and continuous investment, which has allowed the Group to lead the scale and rapid development of the new energy vehicle industry.

Moreover, in the first half of 2022, BYD achieved significant market share in the domestic new energy vehicle market, reaching 24.7%, reflecting a remarkable 7.5 percentage point increment compared to 2021. This performance placed BYD in the No. 1 position globally for new energy vehicle sales, thereby leading the rise of Chinese independent brands in the electric vehicle sector.

Handset Components, Assembly Service, and Other Products Segment

The "Handset Components, Assembly Service, and Other Products" segment contributed approximately RMB 41,070 million in revenue during the first half of 2022. However, this represents a year-on-year decrease of 4.78%. Despite the decrease in revenue, this segment continues to offer diverse products and services, catering to various market needs.

This segment engages in multiple market segments, including smart phones, smart wearables, computers, Internet of Things, smart homes, game hardware, robots, drones, communication equipment, electronic atomizers, new energy vehicles (automotive intelligent systems), medical and health equipment, and more. The Group's strategy involves diversifying its market layout while actively developing new channels for business growth.

Revenue Distribution

The "Automobiles and Related Products" segment accounted for approximately 72.55% of the Group's total revenue during the first half of 2022, reflecting the significant impact of BYD's success in the new energy vehicle industry. On the other hand, the "Handset Components, Assembly Service, and Other Products" segment contributed around 27.27% of the Group's total revenue during the same period.

It is worth noting that historically, BYD's revenue mix has been relatively consistent over the past decade, with automobiles and related products contributing approximately 50% of total revenue, handset components and assembly services comprising about 40% of total revenue, and rechargeable battery and photovoltaics generating slightly less than 10% of the Group's total revenue.

Additionally, BYD has been actively diversifying its international presence, with overseas markets accounting for 30% of total revenue in 2021, indicating a strategic effort to expand its global reach and reduce dependency on the domestic Chinese market. However, the majority of the Group's revenues still come from the domestic Chinese market, including Hong Kong, Macau, and Taiwan, historically ranging from 84% to 90% of total revenue.

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:

New Battery Technologies

Blade Battery using Lithium Iron-Phosphate for EV Uses

BYD is investing heavily in the development of new battery technologies, such as solid-state batteries and lithium-air batteries. These new technologies have the potential to offer higher energy densities and longer battery life than traditional lithium-ion batteries.

Expansion of EV Production Capacity

BYD is increasing its electric vehicle production capacity in order to meet the growing demand for electric vehicles. The company is also expanding its global footprint, opening new manufacturing plants in Europe and the United States. BYD is expected to sell 1.75 million EVs by the end of 2023, with a current total production capacity of 2.9 million units a year. This is expected to rise to 4.3 million units by the end of 2023.

Renewable Energy Projects

Cube Pro Energy Storage System

BYD is investing in a number of renewable energy projects, including solar and wind farms. The company is also developing new battery storage technologies that will help to integrate renewable energy into the grid. BYD's renewable energy projects are expected to generate 10 gigawatts of electricity by 2025. In recent years, BYD has committed to providing renewable energy systems for a number of clients worldwide. For example, the plan to implement a 543 MWh energy storage system (ESS) in Las Vegas using their Cube Pro liquid-cooled batteries was announced this year, a significant step towards the goal of achieving zero carbon emissions by 2050. In addition, BYD is responsible for supplying the world's largest single-phase ESS in the US West Coast, with the energy storage market rapidly growing, BYD Energy Storage grows with it as a major player in the field.

New Vehicle Models

BYD Dolphin - "Affordable" 5-seat EV Hatchback

BYD is planning on releasing a number of new vehicle models in the coming years. These models include the Dolphin, Ocean-X, Seal, Han EV, and Tang EV. A large variety of models tackling every vehicle market segment gives BYD much greater reach than the competition, and with much more affordable price points, BYD becomes a much more compelling entry point into EV for many compared to Tesla and other EV manufacturers. With the BYD Dolphin coming in at £25,490, the budget entry represents BYD's expansion into the European markets, which has never been a focus for Chinese automakers until recently.

These are just a few of the on-going and future projects that BYD is working on. The company is committed to innovation and growth, and it is well-positioned to be a major player in the global technology market.

BYD is a well-positioned company with a strong track record of innovation. The company's on-going and future projects are aimed at expanding its business and capturing new markets. These projects have the potential to make BYD a major player in the global technology market.

Leadership

Chuan-Fu Wang

President & CEO, Executive Chairman

Mr. Chuan-Fu Wang is the President, CEO, and Chairman of BYD Auto Co., Ltd., as well as an Executive Chairman and CEO of BYD Company Ltd. He co-founded Shenzhen BYD Battery Company Limited in 1995 and served as its General Manager. Mr. Wang is also an Executive Director of BYD Company Ltd. and holds director positions in various companies, including Shenzhen DENZA New Energy Automotive Co., Ltd. and Tianjin BYD Auto Co., Ltd. He is recognized as a technology expert and has received numerous awards, such as the Star of Asia and Zayed Future Energy Prize Lifetime Achievement Award. Mr. Wang holds degrees in metallurgy physical chemistry and material science.

Ya-Lin Zhou

Chief Financial Officer, Vice President

Ms. Ya-Lin Zhou is the Chief Financial Officer and Vice President of BYD Company Limited since May 31, 2019. She also serves as the Chief Financial Officer of BYD Electronic (International) Company Limited since January 2016. Ms. Zhou joined BYD Company Ltd. in March 1999 and had been its Chief Accountant from November 2014 until May 31, 2019. She holds a Bachelor's Degree in economics from Jiangxi University of Finance and Economics, earned in 1999. Ms. Zhou is involved in various roles, serving as a Director and Supervisor in several companies, including BYD Auto Finance Company Limited and Shenzhen BYD Electric Car Investment Co., Ltd.     

Qian Li

Secretary to the Board, Company Secretary & GM of Investment Department

Mr. Qian Li is the Director of Sichuan Road & Bridge Co., Ltd. since June 13, 2022. He holds key positions at BYD Company Ltd., serving as Secretary to the Board, Company Secretary Authorised Representative, and General Manager of Investment Department. Mr. Li's association with BYD dates back to August 2005, and he also served as Chief Investment Officer. Additionally, he is the Joint Company Secretary of BYD Electronic International Company Ltd. since November 2007. Before joining BYD, Mr. Li worked at PricewaterhouseCoopers and Arthur Andersen as an Auditor and Business Consultant from July 1998 to August 2001. He has extensive experience in investment, finance, and information technology, and he holds an MBA from Guanghua School of Management, Peking University, and a Bachelor's Degree in Economics from Jiangxi University of Finance and Economics. Mr. Li is also a Supervisor of Tibet Shigatse Zhabuye Lithium High-Tech Co., Ltd.

Ownership Structure

As of the 2023 Annual Report and Exchange Statement, these individuals have a greater than 0.1% share stake out of the 2,905,631,831 shares outstanding:

Individual Shareholder	Share Stake (%)
Chuan-Fu Wang	18.01
Xiang-Yang Lv	8.23
Zuo-Quan Xia	2.86
Nian-Qiang Wang	0.63
Ke Li	0.37
Zhang Wei	0.28

Companies, hedge funds and traditional investment with a share stake above 0.1%:

Shareholder	Share Stake (%)
Youngy Investment Holding Group Co.Ltd.	5.34
Berkshire Hathaway Inc. (BRK.A-US)	3.39
BlackRock Inc. (BLK-US)	2.29
Himalaya Capital Management LLC	1.88
Vanguard Group Inc.	1.48
E Fund Management Co. Ltd.	0.68
First Seafront Fund Management Co., Ltd	0.65
Yinhua Fund Management Co. Ltd.	0.59
GF Fund Management Co. Ltd.	0.50
Mirae Asset Global Investments Co. Ltd.	0.50
China Universal Asset Management Co. Ltd. (560030-SHSE)	0.47
State Street Global Advisors Inc.	0.46
FMR LLC	0.42
Central Huijin Asset Management Ltd.	0.41
Norges Bank Investment Management	0.39
China Asset Management Co. Ltd.	0.37
Fullgoal Fund Management Co. Ltd.	0.30
Perseverance Asset Management LLP	0.26
National Council for Social Security Fund	0.25
Wanjia Asset Management Co. Ltd.	0.22
Zhong Ou Fund Management Co., Ltd	0.22
Invesco Great Wall Fund Management Co. Ltd	0.22
Amundi Asset Management SAS	0.20
Orient Fund Management Co. Ltd.	0.20
BYD Company Limited ESOP	0.19
Guotai Asset Mgmt Co. Ltd.	0.18
ICBC Credit Suisse Asset Management Co. Ltd.	0.17
Huatai-PineBridge Fund Management Co. Ltd.	0.16
First State Cinda Fund Management Co. Ltd.	0.16
BNPP Asset Management Holding	0.15
Goldman Sachs Asset Management LP	0.14
Hang Seng Investment Management Ltd.	0.14
ABC-CA Fund Management Co. Ltd.	0.14
Minsheng Royal Fund Management Co. Ltd.	0.13
UBS Asset Management AG	0.13
Geode Capital Management LLC	0.13
Harvest Fund Management Co. Ltd.	0.12
JP Morgan Asset Management	0.12
Essence Fund Management Co. Ltd	0.12
China Southern Asset Management Co. Ltd.	0.11
Credit Suisse Asset Management (Switzerland) Ltd.	0.11
Dimensional Fund Advisors LP	0.10
AllianceBernstein LP	0.10

Corporate Strategy

With its commitment to technological innovation and sustainability, BYD seeks to further solidify its status as a global player in green mobility and intelligent transportation solutions through diversification, vertical integration and global expansion. These are the most relevant areas identified in the interim report:

New Energy Vehicle Industry and Market Expansion

In light of the prevailing trend of China's new energy vehicle industry, BYD is set to continue its focus on developing competitive products and expanding production capacity for new energy vehicles and core components. The Chinese government's support through policies such as tax exemptions for new energy vehicles further encourages BYD to actively meet market demand and improve its delivery capacity.

The company remains dedicated to deepening research and development in core technologies for new energy vehicles. It aims to cover a wide market segment by emphasizing the mutual development of Battery Electric and Plug-in Hybrid electric technology. The introduction of new models like the 'WORLD-Seal,' 'DENCE D9,' and 'Tang DM-p,' along with continuous Over-The-Air (OTA) upgrades for existing models, showcases BYD's commitment to product innovation and technological advancements.

To enhance its position in the global market, BYD is actively collaborating with excellent dealer partners in various countries, entering markets in the Netherlands, Sweden, Germany, Thailand, Costa Rica, Japan, and more. The company plans to showcase its latest new energy passenger vehicle products at prestigious events such as the Paris Motor Show, solidifying its commitment to sustainability and green mobility on a global scale.

Public Transportation Solutions and Urban Rail Transit

In addition to the new energy vehicle industry, BYD is a major player in the development of battery electric buses and urban rail transit. The company aims to empower low-carbon upgrades in public transportation systems worldwide and provide zero-emission public transportation solutions. Through innovative technologies and high-quality products, BYD is working towards the establishment of a global green mobility system and supporting the development of a low-carbon society.

In the field of urban rail transit, BYD stands at the forefront of world rail transit innovation. Leveraging its integrated innovation approach, the company extends its electric vehicle industry chain to the rail transit sector, focusing on promoting low-carbon and environmentally friendly urban rail transit products, such as the "SkyRail" and "SkyShuttle." These products contribute to the building of low-carbon transportation and the advancement of sustainable and intelligent transportation solutions in cities.

Market-oriented Approach and Strategic Investments

BYD recognizes the importance of market-oriented operations and is actively cultivating more market-competitive businesses. The company aims to unleash the development potential of each business segment, enhance overall value, and make strategic investments in core areas of the industry chain. Collaborating with partners in upstream and downstream sectors of the industry chain will push forward BYD's marketization process and strengthen its market presence.

Handset Components and Assembly Business

In the handset components and assembly business, BYD remains committed to technological advancement and increasing investment in research and development. The company seeks to strengthen core competitiveness by leveraging technological advantages and focusing on developing major customers and expanding market share. As the cross-industry integration of 5G and artificial intelligence technology drives market development, BYD plans to expand its product range and develop more high-quality intelligent products in areas like smart home devices, drones, and electronic atomization products.

Furthermore, with the automotive industry's shift towards electrification and intelligence, BYD aims to capitalize on this trend by increasing investment in research, development, and technological innovation. The deployment of new categories, such as smart cockpit, intelligent driving, intelligent networking, domain controller, and on-board acoustic systems, demonstrates BYD's commitment to staying at the forefront of automotive innovation and driving new business development.

Risks

BYD Company Limited, often hailed as a leader in China's domestic market for new energy vehicles (NEVs), faces several challenges and risks that may impact its position and growth prospects in the industry. Despite its current market standing, BYD encounters formidable competition from both domestic and foreign automakers, making it essential for the company to address the following risks to maintain its competitive edge:

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 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:

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:

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:

BYD has faced patent disputes with companies like Foxconn and Sony in the past, indicating that future patent-related conflicts may arise, potentially affecting the company's development plans and intellectual property rights. Such disputes can lead to legal complications, financial losses, and reputational damage for BYD.

Lack of Innovation:

The ability to innovate is crucial for any automotive company to stay relevant and competitive in a fast-evolving market. Some critics have raised concerns about BYD's innovation capabilities, as the company has experienced delays in launching its own innovative models. With emerging players like Chery and Geely actively investing in new energy vehicle design and manufacturing, BYD must strengthen its innovation efforts to keep pace with the evolving industry landscape. Failure to do so may lead to other companies surpassing BYD in terms of technological advancements and market share.

Valuation

DCF

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
$ million	2016	2017	2018	2019	2020	2021E	2022E	2023E	2024E	2025E
Revenue	100,207,703	102,650,614	121,790,925	121,778,117	153,469,184	171,539,037	191,736,481	214,312,024	239,545,668	267,750,386
% growth		2.44%	18.65%	-0.01%	26.02%	11.77%	11.77%	11.77%	11.77%	11.77%
EBIT	14,358,257	12,851,411	13,379,454	13,495,001	20,789,471	23,386,560	26,308,085	29,594,577	33,291,628	37,450,527
% margin	14.33%	12.52%	10.99%	11.08%	13.55%	12.49%	12.49%	12.49%	12.49%	12.49%
Taxes	-1,088,398	-703,705	-829,447	-312,274	-868,624	-823,894	-781,467	-741,226	-703,056	-666,852
% of EBIT	-7.58%	-5.48%	-6.20%	-2.31%	-4.18%	-5.15%	-5.15%	-5.15%	-5.15%	-5.15%
EBIAT	13,269,859	12,147,706	12,550,007	13,182,727	19,920,847	22,562,666	25,526,618	28,853,351	32,588,572	36,783,675
D&A	7,027,569	7,092,495	9,426,520	9,840,129	12,518,675	13,467,585	14,488,422	15,586,638	16,768,098	18,039,113
% of sales	7.01%	6.91%	7.74%	8.08%	8.16%	7.58%	7.58%	7.58%	7.58%	7.58%	0.00%
						0	0	0	0	0
Capex	12,384,399	14,191,948	18,452,645	19,455,153	12,565,583	14,211,647	16,073,341	18,178,913	20,560,310	23,253,666
% of slaes	12.36%	13.83%	15.15%	15.98%	8.19%	13.10%	13.10%	13.10%	13.10%	13.10%
Changes in NWC		-14,006,913	966,425	147,139	6,236,756	6,101,620	5,969,413	5,840,070	5,713,530	5,589,731
% of sales		-13.65%	0.79%	0.12%	4.06%	-2.17%	-2.17%	-2.17%	-2.17%	-2.17%
Unlevered FCF	7,913,029	19,055,166	2,557,457	3,420,564	13,637,183	15,716,984	17,972,286	20,421,006	23,082,830	25,979,391

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 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.

Risk free rate  (5 year US Bond)	4.20%
Market risk premium	5.00%
Levered beta	0.64
Cost of equity	7.40%
Cost of debt	5.00%
Share price (as of 05/07/2023)	67.94
Shares outstanding (latest reported)	2,861,142,855
Market capitalization	1.94E+17
Internally calculated WACC	7.40%
Terminal growth rate	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.

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).

Equity Value	1,182,930,437
Implied Share Price	$ 57.88
Current Share Price	$ 67.94

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%.

		WACC
		6.00%	6.50%	7.00%	7.40%	8.00%	8.50%	9.00%
Terminal Growth Rate	3.5%	CNY  0.39	CNY   0.33	CNY   0.29	CNY  0.26	CNY    0.22	CNY    0.20	CNY   0.19
	4.0%	CNY  0.49	CNY   0.39	CNY   0.33	CNY  0.29	CNY    0.25	CNY    0.23	CNY   0.20
	4.5%	CNY  0.65	CNY   0.49	CNY   0.40	CNY  0.34	CNY    0.29	CNY    0.25	CNY   0.23
	5.0%	CNY  0.97	CNY   0.65	CNY   0.49	CNY  0.41	CNY    0.33	CNY    0.29	CNY   0.25
	5.5%	CNY  1.93	CNY   0.97	CNY   0.66	CNY  0.52	CNY    0.40	CNY    0.33	CNY   0.29
	6.0%	-	CNY   1.94	CNY   0.98	CNY  0.70	CNY    0.50	CNY    0.40	CNY   0.34

Relative Valuation

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.

Company	Market Cap	P/S	P/E	EV/EBITDA	EV/EBIT
BYD Co	763B	1.6	38.2	29.7	29.7
Tesla	823B	9.6	69.8	47.5	61.9
Toyota	31T	0.8	12.7	9.1	15.9
Porsche	101B	1.8	13.4	6.9	9.5
Mercedes Benz	76.1B	0.5	5.1	4.5	6.1
Audi AG	83.4B	1.4	11.3	10.2	10.2
Volkswagen	73.7B	0.3	5.9	2.7	6.5
Ferrari	70.2B	13.2	70.9	38	55
BMW	69B	0.5	6.2	3.9	6.2
Daimler	67.4B	0.4	3.7	4	5.4
Stellantis	51.9B	0.3	3.4	0.9	1.2
Median	74.9	0.65	8.75	5.7	8
Mean	3241.57	2.88	20.24	12.77	17.79
Lower Quartile	69.3	0.425	5.3	3.925	6.125
Upper Quartile	96.6	1.7	13.225	9.925	14.475

Figure 1.

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.

Figure 2.

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.

Figure 3.

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.  

Figure 4.

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.  

ESG Factors

Environmental Factors:

Carbon Footprint and Climate Change: BYD has committed to being carbon neutral by increasing resources spent on carbon-neutral development and hopes to achieve carbon neutrality in its entire value chain. The company is investing in renewable energy projects, manufacturing energy-efficient vehicles, and developing new battery technologies. BYD continues to be one of the few automakers in China consistently meeting the yearly fuel consumption targets set by the government.

Waste Reduction and Recycling: BYD is working towards reducing waste and increasing recycling rates. It has introduced initiatives like the BYD Zero Waste program, which aims to achieve zero waste in its manufacturing facilities, and the BYD Battery Recycling program, which recycles used batteries from its electric vehicles.

Sustainable Supply Chain: BYD aims to promote sustainability throughout its supply chain by encouraging suppliers to adopt environmentally responsible practices. The company focuses on responsible sourcing, reducing packaging waste, and optimizing transportation to minimize environmental impact.

Social Factors:

Workforce Development: BYD is committed to creating a diverse, inclusive, and safe work environment for its employees. The company invests in workforce development programs, training initiatives, and career advancement opportunities.

Labour Practices: BYD has been praised for its labor practices, which are considered to be some of the best in the industry. The company provides its employees with competitive wages, benefits, and opportunities for advancement.

Community Engagement: BYD supports local communities through various initiatives, including philanthropy, job creation, and infrastructure development. The company also engages in disaster relief efforts and supports educational programs in underserved communities. In 2020, BYD spent 21.0 Million RMB on charity expenses.

Governance Factors:

Board Structure and Independence: BYD's board is composed of directors with diverse backgrounds and expertise. The company emphasizes the importance of independent directors and maintains a strong governance structure.

Transparency and Reporting: BYD publishes an annual sustainability report that provides detailed information on its ESG initiatives, progress, and challenges. The company strives to maintain transparency in its reporting and regularly engages with stakeholders. In 2020, the Group provided 651 class hours of anti-corruption and self-discipline training sessions.

Data Privacy and Security: BYD is committed to protecting customer data and complying with relevant regulations. The company has a robust data privacy and security program in place.

BYD has made significant strides in addressing environmental, social, and governance challenges. The company has a strong commitment to reducing its carbon footprint, promoting workforce development, engaging with communities, and maintaining strong governance practices. However, there are still areas where BYD can improve, such as increasing its disclosure of ESG data and strengthening its data privacy and security practices. By continuing to prioritize ESG factors and implementing sustainable practices, BYD can further strengthen its position as a responsible corporate citizen and contribute to a more sustainable and inclusive future.