BYD - a new force in sustainability & Q1/2022 earnings review

Overview of BYD (from Yahoo Finance)

BYD Company Limited, together with its subsidiaries, engages in the research, development, manufacture, and sale of automobiles and related products in the People's Republic of China and internationally. It operates through three segments: Rechargeable Batteries and Photovoltaic Products; Mobile Handset Components, Assembly Service and Other Products; and Automobiles and Related Products and Other Products. The company offers internal combustion, hybrid, and battery-electric passenger vehicles; buses, coaches, and taxis; logistics, construction, and sanitation vehicles; and vehicles for warehousing, port, airport, and mining operations. It also manufactures and sells lithium-ion and nickel batteries, photovoltaic products, and iron batteries primarily for mobile phones, electric tools, and other portable electronic instruments; mobile handset components, such as housings and electronic components; medical protection products; and automobiles, and auto-related moulds and components, as well as provides assembly, and automobiles leasing and after-sales services. In addition, it offers rail transit equipment; solar batteries and arrays; and urban rail transportation services. The company was founded in 1995 and is headquartered in Shenzhen, China.

Summary of BYD (in HKD$)

Highlights (in HKD$):
52-week range is between 165 to 324.60
PE (TTM) 283.31

EPS (TTM) 1.059

Market cap of HKD$1.023T

Share Statistics

Avg Vol (3 month) 8.27M

Avg Vol (10 day) 7.95M

Shares Outstanding 1.1B

% Held by Insiders 20.63%

% Held by Institutions 27.56%

10 years overview of Cashflow 

Cashflow of the last 5 years

Balance Sheet from last 4 years

From the balance sheet, we observe the following in (CNY$):

healthy assets growth of $94B YoY (46 growth%)

liabilities growth of $55B YoY (40% growth)

Equities growth of $40B YoY (62% growth)

I am glad to see that the net debt is improving over time

The total debt is on a downward trend.

The tangible book value has grown 87% from 40B to 75B

Recent Earnings Report (Q1/2022 ending 31 March 2022)

This is my review of BYD's recent Q1/2022 earnings (1211.HK).

Overview (comparing Q1/2022 with Q1/2021) with highlights (in RMB$):

• Revenue grew by 63.02% to $66B from $40B.
• Net profit attributable to shareholders of the listed company grew 240.59% to $808M from $237M
• Net profit attributable to shareholders of the listed company (after deduction of extraordinary gains or losses) grew 729.44% from a loss of $81M to a profit of $513M
• Net Cash flow from operating activities grew 8,312.29% from $141M to $11,933M.

Summary of Q1/2022 performance

Balance Sheet review (comparing 31 Dec 2021 with 31 Mar 2022 in RMB):

We have seen a good debt reduction and the business investing in new facilities (seen in construction in progress).  Ideally, we want assets to increase and debts to reduce.

• Financial assets (assets) were reduced by 71.61%
• Receivable financing (assets) increased by 77.73%
• Prepayments (assets) increased by 36.35%
• Increase of other current assets by 43.03%
• Construction (CAPEX - assets) seen expansion in battery and automobile business by 37.91%
• Short term borrowings (debt) were reduced by 46.28%
• Notes Payable (debt) was reduced by 33.96%
• Contract liabilities (debt) were increased by 46.81% (due to pre-payment)
• Non-current liabilities (debt) due within a year were reduced by 34.07%
• Other current liabilities (debt) increased by 45.28% mainly due to tax.

Balance Sheet of BYD as of 31 Mar 2022

Statement of profit or loss observations (comparing Q1/2022 with Q1/2021 in $RMB):

• glad to see the revenue grew by 63.02% but the cost of operations grew even more.
• Good to see sales & administrative expenses grew at a lesser pace than revenue.
• However, the R&D expenses grew by 93.94%.  Hopefully, we can see better products, solutions in the coming future with this investment.
• Good to see a great reduction in Finance expenses by over 113.61%.
• There is a good "gain" of 1,371.68% in fair value of non-current financial assets and forward exchange remittance.

Statement of profit or loss for BYD

Statement of Cashflow (in RMB$)

• This is astonishing to see an increase in net cash flows from operating activities which is the core business by 8,312.29% (from $141M to $11,933M)
• It is good to see investing increase by 162.55% (from the purchase and construction of fixed assets, intangible assets and other long term assets).  This is part of CAPEX
• There is a drop in net cash flow from fundraising from issuance of additional H shares (in HKSE) for previous period.

Cashflow of BYD

Given the above, BYD looks to be doing well in revenue growth, profit growth, debts reduction, assets accumulation and backed by a strong balance sheet and cash flow.

Here is some news concerning BYD from CnEVPost:

BYD sees electrification moving much faster than imagined as its order backlog reaches 600,000 units

"We feel that the electrification process is accelerating much faster than we thought," said BYD Chairman Wang Chuanfu.

BYD is the 2nd biggest EV battery maker in China

BYD exec has confirmed supplying EV batteries to Tesla. 

BYD monthly sales since 2020

BYD sold 114,943 vehicles in May, exceeding 100,000 for the third consecutive month, according to figures released.

BYD has sold over 500,000 vehicles from Jan to May, a 350% increase compared to the same period from a year ago.

Outlook of BYD

1D chart of BYD (1211.HK) as of 09June2022

From the chart above, we can expect the BYD price to peak soon.  The Stochastic indicator has peaked and the MACD should follow.  However, there is more good news as we are also looking at the formation of a Golden Cross.  This is a usually bullish indicator when the Moving Average (MA) 50 line cuts the MA 200 from below.