Deutsche Bank analyst Bin Wang projects a near-term slowdown in BYD's sales, citing reduced government subsidies, but forecasts a return to robust growth in 2026, driven by new product launches and technological upgrades.
Near-Term Headwinds: Subsidy Phase-Out Impact
According to dealer feedback cited by Wang, nationwide new orders in November fell approximately 22% month-over-month. This decline is attributed to a reduction in the government's trade-in subsidy program. Consequently, BYD's group sales volume is expected to remain flat year-over-year in December 2024.
2026 Recovery Thesis: New Brands and Technology
Deutsche Bank expects sales growth to turn positive in 2026, forecasting a 19% volume increase. This recovery is predicated on:
- New Product Launches: Introduction of models from BYD's higher-end brands, Denza and Equation Leopard, which carry better margins.
- Technology Rollout: BYD plans to launch new technology in Q1 2026, potentially including high-performance batteries and more affordable models, which would enhance overall product competitiveness.
Investment Rating and Valuation:
Deutsche Bank maintains a Buy rating on BYD with a target price of HK$144.00. This implies a significant ~45% upside from the last traded price of HK$99.25 for its Hong Kong-listed shares.
Broader Context:
The note highlights a transition period for the world's largest EV maker. While temporary policy shifts are creating volatility, the firm's long-term strategy of vertical integration, brand diversification, and continuous technological innovation is seen as the foundation for the next leg of growth.
Bottom Line:
Deutsche Bank views the current sales softness as a short-term, policy-induced dip within a sustained upward trajectory. The anticipated 2026 rebound, fueled by premium brand launches and new tech, supports a constructive outlook. The substantial gap between the current price and the target suggests the market may be overly focused on near-term noise rather than the medium-term growth drivers. Investors will watch for early signs of order recovery and details on the Q1 2026 technology launch.