BYD, market value management is here

BYD plans to establish a market value management system.

On the evening of December 27, 2024, BYD announced that in order to effectively promote the company's investment value, strengthen and standardize the company's market value management behavior, and protect the legitimate rights and interests of the company and investors, the board of directors agreed to authorize the company's management to formulate the "Market Value Management System" in accordance with the relevant regulations such as the China Securities Regulatory Commission's "Guidelines for the Supervision of Listed Companies No. 10 - Market Value Management," and based on the actual situation of the company. The company will fulfill its information disclosure obligations as required by the Shenzhen Stock Exchange.

What measures will BYD take next to promote the enhancement of the company's investment value? The impact of this event on BYD's stock price is still unknown; however, the company has already taken the first step in market value management, which may have a profound impact on the company's long-term development.

BYD is currently the largest new energy vehicle company by market value in the A-share market, with a latest market value of 832.9 billion yuan. The company's revenue in the third quarter of this year has historically exceeded Tesla's performance during the same period. However, BYD's latest market value is only one-twelfth of Tesla's market value.

BYD plans to establish a market value management system

As an important component stock of many broad-based indices and a large company in the A-share market, BYD's strengthening of market value management may have a positive impact on stabilizing the market and its own value. The company has taken the first step in market value management, which may have a profound impact on the company's long-term development in the future.

Recently, an increasing number of listed companies have announced their market value management systems. According to rough statistics by Securities China reporters, more than 30 listed companies have officially announced their market value management systems this year. In addition to some state-owned enterprises, many private enterprises have also quickly taken action to formulate and publish market value management systems. Companies such as Jianlang Hardware, Bull Group, Yuyue Medical, and Jerry Holdings have recently announced their market value management systems.

Since the beginning of this year, under the advocacy and promotion of regulatory authorities and the State-owned Assets Supervision and Administration Commission, more and more listed companies have begun to pay attention to market value management, making it a "required course" for listed companies.

On November 6, 2024, the China Securities Regulatory Commission officially released the "Guidelines for the Supervision of Listed Companies No. 10 - Market Value Management" (hereinafter referred to as the "Guidelines"). The Guidelines require listed companies to enhance their operational efficiency and profitability based on improving company quality, and to legally and compliantly use methods such as mergers and acquisitions, equity incentives, employee stock ownership plans, cash dividends, investor relations management, information disclosure, and share repurchases to promote the reasonable reflection of the investment value of listed companies. The Guidelines clarify the responsibilities of the board of directors, directors, and senior management of listed companies, and make specific requirements for major index component companies to formulate market value management systems and for long-term companies with a net asset value below par to disclose valuation enhancement plans. At the same time, the Guidelines explicitly prohibit listed companies from engaging in illegal and irregular activities under the guise of market value management.

On December 17, in order to further promote central enterprises to pay close attention to the market value performance of their controlling listed companies, to standardize and orderly carry out market value management work, to enhance the investment value of listed companies, and to effectively protect investors' rights and interests, the State-owned Assets Supervision and Administration Commission recently issued "Several Opinions on Improving and Strengthening the Market Value Management Work of Central Enterprises Controlling Listed Companies," which includes nine points The State-owned Assets Supervision and Administration Commission of the State Council stated that it will focus on the implementation of the aforementioned documents, making the enhancement of the investment value of central enterprises' controlled listed companies and strengthening investor returns a long-term task. It will guide and promote central enterprises to effectively utilize market value management tools, actively respond to market concerns, protect investor interests, and make new and greater contributions to the high-quality development of the capital market.

Many investors believe that market value management helps guide listed companies to improve their quality and focus on performance growth, achieving a virtuous cycle of market value growth and company development.

BYD's Market Value Far Below Tesla

BYD is currently the largest new energy vehicle company by market value in the A-share market, with a latest market value of 832.9 billion yuan and a rolling price-to-earnings ratio of 24.6 times. After years of accumulation, BYD has accelerated its development, consistently breaking historical records in both sales and performance.

The latest third-quarter report disclosed by BYD shows that its performance has historically surpassed that of the globally renowned new energy vehicle company—Tesla—for the first time.

Tesla and BYD are the two largest electric vehicle manufacturers in China and even globally, holding significant positions in the global electric vehicle market, both maintaining growth amid fierce industry competition.

BYD's third-quarter report shows that the company's revenue in the third quarter reached 201.1 billion yuan, surpassing Tesla's revenue of 179.4 billion yuan during the same period for the first time. In the first three quarters, BYD's revenue was 502.251 billion yuan, a year-on-year increase of 18.94%, with a net profit of 25.238 billion yuan, a year-on-year increase of 18.12%. In contrast, Tesla's revenue in the first three quarters was 504.4 billion yuan, with a non-GAAP net profit of 41.366 billion yuan. In terms of performance, BYD continues to maintain rapid growth, while Tesla has seen a decline this year. BYD's revenue is gradually catching up to Tesla, and the gap in net profit is also narrowing.

However, there is a huge gap in market value between BYD and Tesla. Tesla's stock price has risen by 82.76% this year, with a latest market value close to 1.46 trillion USD (approximately 10.48 trillion yuan), while BYD's stock price has increased by 46.37% this year, with a latest market value of only 832.9 billion yuan. In comparison, BYD's market value is only one-twelfth of Tesla's market value.

BYD's rapid growth has not slowed down due to a high base. The company's sales report for November 2024 shows that in November 2024, the company's vehicle sales reached 507,000 units, a year-on-year increase of 67.87% and a month-on-month increase of 0.83%; from January to November 2024, the company's cumulative vehicle sales reached 3.757 million units, a year-on-year increase of 40.02%.

It is worth noting that due to fierce competition in the domestic new energy industry, many new energy companies have experienced a decline in stock performance after being heavily speculated. Therefore, even leading companies in the new energy sector have been affected, with the market giving the industry a low valuation.

Regarding passenger vehicles, China International Capital Corporation pointed out that technological innovation and policy support underpin domestic demand, with new energy substitution, independent rise, and global expansion being the medium- to long-term highlights. In 2024, domestic passenger vehicle demand is expected to exceed expectations, reflecting the resilience of domestic demand and the effects of stimulus policies. The penetration of new energy is rapidly increasing, with intense price competition and rapid changes in the market structure, but the rise of Chinese independent brands is the most critical investment variable Looking ahead, it is expected that fiscal and tax support policies will remain strong, with steady growth in demand anticipated. The penetration of new energy is expected to further accelerate breakthroughs, and overseas sales will open up new opportunities. The intensity of price competition is expected to ease, allowing for the exploration of investment opportunities in leading car manufacturers with greater expected differences, focusing on marginal changes brought about by strong product cycles in blue ocean markets. Additionally, the moment of singularity in autonomous driving and the overseas expansion of leading car manufacturers remain key areas of focus.

Hualong Securities' research report points out that BYD Company has a rich reserve of new products, supporting the company's high-end process. Furthermore, the gradual establishment of overseas production capacity from 2024 to 2025 is expected to support the continuous increase in overseas sales. The company's sales base is solid, and the rich reserve of high-end new products is expected to support BYD's advancement in the high-end process, with BYD's price-to-earnings ratio being lower than the average of comparable companies.

Risk Warning and Disclaimer

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at one's own risk