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For the past few days, I have been flogging through BYD’s 1H interim financial report. Overall, the performance was what I expected, if less than some estimates, but some notable items were revealed.
A large number look solid, if not wire. Sale, revenue, gross profit, net income… for half a day, as I expected, but some are less than forecasts. And when you went to mathematics to break it for a quarter, 2 Qi was not so impressive. We may have made a large -scale BYD habit that exceeds expectations, but that number was less than a positive surprise. He also talked about some of the market dynamics and the introduction of the product we already knew about. There was no major revelation about what is in the pipeline.
The balance sheet was rapidly positive, with more assets than liabilities. Donations, including accounts and trades payable, are less than industry standards. As stated in the report: “The group’s trade payments and bills payment business were at a lower level in the automotive industry and in 2024, the reporting period was further decreased during the same period.” Total shareholders were a significant 32 % YOY.
For half of the total and net profit for half were YV on high income. However, the margin refused a little Yoy. When the quarter is broken, it looks less positive, with margin 2Q vs. a steeller 1 Q and pure profit reduction with a 30 % YOY reduction, after 1 Q 2022, the first quarter decreased in the first quarter. However, the margin is still higher than most rivals, especially the first half has been challenged for the industry. But the margin reduction was also expected by some people, as I mentioned in a post a few months ago – “Byd has maintained a net profitable and growing margin to re -invest in R&D and business growth. Generally, when net profit increases, they are raising, and they are raising high prices.
Talking about R&D, costs increased by 53 % Yoy – which is more than doubled with net income. People have thought how long can BYD maintain its R&D growth, but it doesn’t look like it is slowing down. It is undoubtedly aided by the company’s growing patent count. And they are rapidly creating a new campus for 60,000 senior level researchers and engineers, most of which, with graduate degrees, are provided with infrastructure to further expand R&D activities.
In terms of expansion, BYD has clearly emphasized. Overseas revenue has increased rapidly, with more than 36 % of the total revenue. When you consider that the growing majority of the company’s income comes from EV, only China makes almost 3 of the global EV market, and the US/Canadian governments are essentially preventing them from their markets. Then the extension of BYD outside China is sufficient. It seems that its growing investment outside the Chinese market is also ending. Particularly this is the case in developing countries in the global South, both for sale and manufacturing. We have seen several notable reports in the last week of expansion in Latam, Africa and Asia, including exports from Thailand to Europe. Since these are growing economies, they create long -term opportunities.
Anything should be mentioned Not Report: Subsidic or Regulatory Credit Revenue. In the annual report of 2024, income was registered under the “official grant”. But nothing here. In addition, the final accounting for all subsidy payments from 2016-2020 was recently released by the MIIT, and BYD received a total of US $ 2.2 million during that period. It is less than 1 % of the total subsidy paid to car makers in China, and is less than 401K. Since 2021-2022, the total subsidy from BYD subsidiaries was up to US $ 10.27 million. But it’s millions, not billions. Consumers are also being subsidized in China, such as ~ 2,800 US $ 2,800 to remove the old snow from the road and replace them with EV. However, this is still less than in the United States, less than 7,500 consumer tax credit. In addition, BYD pays important taxes, which is higher than net profit, and is a net assistant in public income. It all runs against the permanent but wrong “unfair subsidy” statement.
Overall, BYD is on solid financial basis. However, sales are being produced inside China, their global image is being developed, and their R&D fuel technology is being developed. It will be interesting to see how it develops in future circles.
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