BYD Company Limited

BYD's overseas sales surged 5.5% year-on-year to 403,472 vehicles in June 2026, with export volumes forecast to reach 1.8 million units in 2026 and 2.5 million in 2027. This international momentum, supported by a planned second European manufacturing plant, is expected to drive earnings growth of over 30% and offset domestic headwinds.

BYD shares dropped 50% from their 2025 peak amid brutal domestic price competition, and concerns persist that margin erosion in China — BYD's core market — cannot be fully compensated by overseas volumes alone. The earnings outlook remains structurally fragile as long as pricing pressure in the home market continues unabated.

CLSA anticipates that as BYD's flash-charging battery production capacity ramps up, it will alleviate investor concerns about profitability and ease sales pressure. The firm forecasts BYD's domestic market share will rebound to approximately 25% by year-end 2026, supported by a robust pipeline of new products under development.

BYD's Stock Score of 44/100 sits 12% below its historic median, signaling elevated risk. Despite a recent price rally, the stock's long-term moving average remains in a sell signal, and near-term forecasts point to continued downside pressure, suggesting the market remains skeptical about a sustained domestic recovery.

BYD is forecast to grow earnings and revenue at 20.7% and 10.8% per annum respectively, outpacing both the Hong Kong market and the broader auto sector. EPS is expected to grow at 20.4% annually, and projected revenues are set to surpass CNY 1.13 trillion by 2028, reflecting strong fundamental momentum.

Despite strong earnings growth forecasts, BYD's return on equity is projected to remain relatively low at 16% in three years, and revenue growth of 10.8% annually falls short of the 20% high-growth threshold. This raises questions about capital efficiency and whether profitability improvements can truly justify elevated valuation expectations.