BYD 2Q profit seen rebounding to RMB9 billion, Morgan Stanley says

Morgan Stanley expects BYD Co. to report second-quarter net profit of RMB9 billion ($1.2 billion), a sharp rebound from the first quarter's low base that could restore investor confidence after a year of earnings adjustments.

"BYD is poised for a strong recovery in 2Q results, rebuilding market confidence and supporting a valuation re-rating in the second half and into 2027," the broker said in a report. Morgan Stanley maintained its Overweight rating on the Shenzhen-based automaker with an H-share target price of HKD121.

The forecast implies vehicle sales of 1.1 million units for the quarter ended June, up 58% from the first quarter, underpinned by a 68% sequential jump in domestic deliveries and a 47% rise in overseas sales. Revenue is projected at RMB217 billion, up 45% quarter over quarter. For the full year, Morgan Stanley estimates BYD will sell 4.6 million vehicles, comprising 2.8 million domestic units and 1.8 million overseas units. Second-half sales are forecast at 2.8 million units, up 12% from a year earlier.

The earnings recovery comes after a period of margin compression and competitive pressure in China's EV market. A strong 2Q print would signal that BYD's cost structure and pricing power remain intact despite intensifying competition from peers such as Geely and XPeng. The stock fell 3.4% on Thursday, with short selling accounting for 31.6% of turnover, reflecting lingering bearish positioning. A confirmed earnings beat could trigger a short squeeze and drive the stock toward Morgan Stanley's target, which implies roughly 20% upside from current levels. Investors will watch for BYD's official 2Q release, expected in late August, for actual margins and segment-level profitability.

This article is for informational purposes only and does not constitute investment advice.