JPMorgan raises BYD target price, sees market sentiment towards auto stocks turning positive

 

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JPMorgan maintains a positive view on Chinese automaker BYD Company’s H-shares, expecting potential upside from its local electric vehicle business and overseas expansion, the bank said in a report after its automotive team visited major offshore stores of BYD Company in Japan, Thailand, France, Germany, Singapore and Hong Kong in the past few weeks.

The bank raised the forecast of BYD’s revenue in 2023 – 2025 by 11% – 17% and its net profit forecast by 30% – 58%.

Chinese auto stocks rebounded about 6% last week, outperforming the 4% rise by the Hang Seng China Enterprises Index, mainly driven by the news on policy stimulus, price cuts by some carmakers and potential short covering activities, it said.

Market sentiment is turning positive, with BYD expected to be one of the beneficiaries of China’s rural subsidy or nationwide promotion campaign, even though limited details are known about it, it added.

JPM liked BYD’s leading position in the local EV market, especially for plug-in hybrid electric vehicles (PHEVs), and believed the export market offers long-term upside.