Maintain BUY. We attended BYD’s annual general meeting (AGM) and management sharing session on 6 Jun 2025. We summarize some key takeaways as below. n Payable risks. BYD’s chairman confirmed that all the businesses in the Group are included in the listed entity. That, along with our research on BYD’s financials, suggests that the liquidity risk at BYD is limited. BYD had notes and accounts payable of RMB244bn at the end of FY24. We also estimate that about 98% of its other payables (or RMB143bn) at the end of FY24 could be related to payables to suppliers. We are of the view that such payable exposure vs. its FY24 revenue of RMB777bn and net cash of RMB74bn suggests controllable liquidity risks. We believe the key to auto industry’s long-term healthy development in China is to enhance car quality control and related penalty management by the government. n Sales target. Management expects overseas sales volume to exceed 0.9mn units in FY25. Management is confident to achieve overseas sales of 4-6mn units in the long term. That, along with its long-term domestic sales target of 6-7mn units (30% market share in the NEV segment with 80-90% NEV penetration), would lead BYD to a sales volume of 10mn units. The chairman believes it will not take too long. n Premiumization and ADAS. Denza targets 0.2mn+ units (or close to a 10% market share in the price range of RMB300,000-600,000) in FY25.

Management is confident that Denza could achieve a similar market share as Mercedes-Benz now in China in the long term. Therefore, management believes that BYD could maintain its average selling price (ASP) level despite stiffer competition in the mass-market segment. Management is also confident to catch up with peers in terms of ADAS capabilities in a short period, given its heavy R&D investments and superb engineering capabilities. n Valuation/Key risks. We maintain our FY25E sales volume forecast of 5.25mn units. We also maintain our forecast of a 4% YoY increase in its NEV ASP in FY25E. Accordingly, we keep our FY25E net profit forecast unchanged at RMB57.5bn. We maintain our BUY rating and target price of HK$470 for H share and RMB440 for A share, both of which are still based on 23x (unchanged) our FY25E EPS. Key risks to our rating and target price include lower sales or margins than we expect, and a sector de-rating.