Stock Analysis & Valuation BYD Company Limited (002594.SZ)

• Previous Close: $90.89
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	90.65	0
Intrinsic value (DCF)	3309.51	3541
Graham-Dodd Method	27.24	-70
Graham Formula	165.58	82

Strategic Investment Analysis

Company Overview

BYD Company Limited is a Chinese multinational technology company and global leader in electric vehicles and clean energy solutions. Founded in 1995 and headquartered in Shenzhen, BYD operates through three core segments: Automobiles and Related Products, Rechargeable Batteries and Photovoltaic Products, and Mobile Handset Components and Assembly Services. The company has transformed from a battery manufacturer into a vertically integrated EV powerhouse, producing a comprehensive range of vehicles including passenger cars, buses, coaches, taxis, and specialized commercial vehicles for logistics, construction, and municipal operations. BYD's unique competitive advantage stems from its complete in-house supply chain, manufacturing its own batteries, semiconductors, and key components. As the world's largest electric vehicle manufacturer by sales volume, BYD dominates the Chinese EV market while rapidly expanding globally through strategic international partnerships and manufacturing facilities. The company's diversification into renewable energy storage, rail transit equipment, and electronics manufacturing positions it at the forefront of sustainable technology innovation. With over 870 million shares outstanding and a market capitalization exceeding ¥956 billion, BYD represents a cornerstone investment in the global transition to electric mobility and clean energy infrastructure.

Investment Summary

BYD presents a compelling investment case as the global leader in electric vehicle manufacturing with strong financial fundamentals. The company demonstrates robust profitability with net income of ¥40.3 billion on revenue of ¥777.1 billion, translating to diluted EPS of 4.61. BYD's balance sheet strength is evident with ¥102.7 billion in cash equivalents against manageable total debt of ¥30.2 billion, providing significant financial flexibility. The company generates substantial operating cash flow of ¥133.5 billion, supporting aggressive capital expenditures of ¥97.4 billion for capacity expansion and technological advancement. A dividend yield of approximately 1.3% offers income component, while the low beta of 0.322 suggests relative stability compared to broader market volatility. Key risks include intensifying competition in the EV space, potential trade barriers in international markets, and dependence on Chinese government subsidies and policies supporting electric vehicle adoption. The company's vertical integration strategy provides cost advantages but requires continuous heavy investment in R&D and manufacturing capabilities.

Competitive Analysis

BYD's competitive positioning is uniquely strengthened by its vertically integrated business model, which encompasses the entire EV value chain from raw materials to finished vehicles. The company manufactures its own Blade batteries, power semiconductors, motors, and electronic control systems, providing significant cost advantages and supply chain security unmatched by most competitors. This integration allows BYD to achieve industry-leading economies of scale while maintaining quality control across components. In the Chinese market, BYD dominates with approximately 35% market share in new energy vehicles, leveraging extensive manufacturing capacity and nationwide dealership networks. The company's competitive strategy focuses on technological innovation, particularly in battery safety and energy density, while offering vehicles across multiple price segments from affordable models to premium offerings. BYD's early mover advantage in electric buses and commercial vehicles provides additional revenue streams and establishes the company as a comprehensive mobility solutions provider. Internationally, BYD is expanding through local manufacturing partnerships and leveraging its expertise in electric buses to gain municipal contracts worldwide. The company's diversification into energy storage systems creates synergies with its automotive business and positions BYD as an integrated clean energy company. However, BYD faces intensifying competition from both traditional automakers transitioning to electric vehicles and new EV startups, particularly in premium segments where brand perception remains a challenge outside China.

Major Competitors

• Tesla, Inc. (TSLA): Tesla is BYD's primary global competitor in electric vehicles, known for its premium brand positioning and autonomous driving technology. Tesla's strengths include strong brand recognition, superior software capabilities, and a global Supercharger network. However, Tesla lacks BYD's vertical integration depth and faces challenges in producing affordable mass-market vehicles. While Tesla leads in premium EVs, BYD dominates the mass market segment with more affordable models and greater production scale in China.
• BYD Company Limited (1211.HK): This is the same company listed on the Hong Kong Stock Exchange. The dual listing provides additional liquidity and international investor access but represents the same underlying business with identical competitive positioning and financial performance.
• NIO Inc. (NIO): NIO competes with BYD in the premium EV segment in China, focusing on battery swapping technology and premium user experience. NIO's strengths include strong brand loyalty, innovative battery-as-a-service model, and high-quality customer service. Weaknesses include smaller production scale, higher vehicle prices, and continued operational losses compared to BYD's profitability. NIO targets a different customer demographic than BYD's mass-market focus.
• XPeng Inc. (XPEV): XPeng competes with BYD in the smart EV segment, emphasizing advanced driver-assistance systems and connectivity features. Strengths include strong technology capabilities, particularly in autonomous driving, and competitive pricing in the mid-premium segment. Weaknesses include smaller manufacturing scale, limited model variety, and narrower market reach compared to BYD's comprehensive product lineup and distribution network.
• Li Auto Inc. (LI): Li Auto competes with BYD in the hybrid and electric SUV market, specializing in extended-range electric vehicles (EREVs). Strengths include strong sales performance in the family SUV segment, efficient range-extender technology, and profitability among Chinese EV startups. Weaknesses include limited product diversification beyond SUVs and reliance on hybrid technology as pure EVs gain market share, where BYD has broader expertise.
• Toyota Motor Corporation (7267.T): Toyota represents traditional automotive competition transitioning to electrification. Strengths include global manufacturing scale, strong brand reputation, and hybrid technology leadership. Weaknesses include slower EV adoption compared to BYD, less advanced battery technology, and limited pure EV model offerings. Toyota's cautious approach to full electrification has allowed BYD to establish leadership in the Chinese EV market.
• Volkswagen AG (VOW3.DE): Volkswagen is a major global competitor aggressively pursuing electrification through its MEB platform. Strengths include massive manufacturing scale, strong European market presence, and significant R&D investment. Weaknesses include slower adaptation to the Chinese market's EV preferences and software development challenges. Volkswagen partners with BYD in China while competing globally, highlighting BYD's technological competitiveness.
• General Motors Company (GM): GM competes with BYD in the global EV market, particularly in North America and China. Strengths include established manufacturing infrastructure, strong truck and SUV portfolio, and Ultium platform technology. Weaknesses include slower EV production ramp-up, higher costs compared to Chinese manufacturers, and competitive challenges in the Chinese market where BYD dominates.