BYD $BYD COMPANY(01211.HK) released its first-quarter 2025 earnings forecast, reporting a net profit attributable to shareholders of 8.5–10 billion yuan, representing a year-on-year increase of 86%–119% and exceeding market expectations of 8.06 billion yuan.

Based on the midpoint of the net profit guidance (9.25 billion yuan), Dolphin Research estimates that BYD's first-quarter sales will reach 1 million units, implying a net profit per vehicle of over 8,000 yuan. Previously, the market had expected BYD's first-quarter net profit per vehicle to be around 7,000 yuan, primarily due to the belief that BYD would be in a model transition period in Q1 2025: old models were significantly discounted for clearance, while new intelligent driving models were ramping up relatively slowly (with production gradually increasing from around March). Therefore, the net profit per vehicle expectation was anchored to BYD's launch of the "Honor" version (a discounted, downgraded model) in Q1 2024, which had a net profit per vehicle of 6,700 yuan.

Dolphin Research believes that BYD's net profit per vehicle exceeding expectations is mainly due to two factors:

1. Significant growth in overseas sales, positively contributing to net profit per vehicle:

In Q1 2025, BYD's overseas sales reached 206,000 units, growing by 73% compared to Q4 2024—driven primarily by the ramp-up of overseas production capacity. Overseas sales accounted for 20.6% of total sales in the quarter, and the net profit per vehicle from these sales was higher, thereby offsetting the adverse impact of price reductions during the model transition.

2. In the first quarter of 2025, due to the ramp-up of overseas production and the gradual introduction of intelligent driving models starting in March, BYD still achieved sales of 1 million units, releasing scale effects:

Unlike last year's first quarter—when BYD launched the Honor version and the DMI 5.0 model began to ramp up only in the second quarter—this year’s intelligent driving models were launched earlier, starting in Q1. Meanwhile, BYD reduced prices on old models, and together with the boost from overseas market expansion, the company achieved 1 million unit sales during the traditionally slow first-quarter season, a 60% year-on-year increase, thereby realizing scale effects compared to last year’s Q1.

Currently, BYD's valuation remains relatively low, with potential upward catalysts ahead:

① According to current research, the proportion of orders for intelligent driving models has exceeded 50%, and with a concentrated launch of intelligent driving models in March and April, sales may continue to climb;

② Continued high growth in overseas sales will have a sustained positive impact on profitability (annual overseas sales target of 800,000 units);

③ The negative impact on the automotive business' gross profit margin—from adding features to intelligent driving models without price increases—may be offset by supply chain cost reductions and scale effects;