After the crash, analysts weigh in on BYD's standing.

In a recent development, BYD, the Chinese electric vehicle (EV) and battery manufacturer, released its second-quarter results, which showed a decrease in net profit by approximately 30% compared to the same period last year, amounting to 6.36 billion yuan. However, the recovery of the stock after an initial dip suggests a positive market response to the company's performance.

According to Tim Hsiao's analysis, high dealer discounts and price cuts, as well as the inclusion of new assistance systems like "Gods Eye" without additional charge, contributed to the profit decline. The gross margin for the second quarter was at its lowest since Q2/2022.

Despite the disappointing second-quarter results, Jeff Chung of Citigroup remains extremely optimistic about BYD's long-term growth. He believes that export trends, increasing global market share, and potential cost reduction in China by fiscal year 2026 will drive BYD's growth. Chung has set a price target of 233 Hong Kong dollars (25.60 euros) for the stock.

The stock has already recovered from its brief dip and must quickly retake the important 200-day line at 115.42 Hong Kong dollars (12.65 euros). JPMorgan's view on BYD remains unchanged, especially regarding its overseas expansion, with Nick Lai of JPMorgan expecting BYD's situation to improve in the second half of the year.

BYD is ahead of schedule with capacity expansion in Indonesia, Brazil, and Hungary. This expansion is expected to improve the company's visibility and dealer network, addressing one of the challenges identified in the growth strategy.

The forecast for BYD's stock in the third and fourth quarters of 2023 is typically made by analysts who follow the company's quarterly financial results. The quarterly earnings estimates (e.g., EPS estimates) are given for upcoming periods like Q3 and Q4 2023 on financial platforms such as Finanzen.net. The stock movement is influenced by related industry players like CATL whose production expansions are seen as a positive signal for BYD.

Morgan Stanley's target for BYD is 136 Hong Kong dollars (15.00 euros), and JPMorgan's is 150 Hong Kong dollars (16.50 euros). Tim Hsiao of Morgan Stanley commented that the second-quarter results fell short of expectations and consensus.

BYD should emerge as a winner in China's price war due to its size, resulting scale effects, and value chain. This competitive advantage is expected to contribute to the company's long-term growth, as highlighted by Chung.

In conclusion, while the second-quarter results were disappointing, the long-term prospects for BYD remain optimistic, with analysts anticipating a recovery in the third and fourth quarters of 2023. The company's strategic expansion and cost reduction initiatives are expected to drive its growth, positioning BYD as a key player in the global EV market.