[Click eStock] "BYD Soars Despite European Tariffs"

On the 14th, NH Investment & Securities analyzed BYD, China's largest electric vehicle company, stating that "despite the imposition of tariffs on China by Europe, the stock price is soaring." The consensus target price is 276.7 yuan.

The European Union is pushing for additional tariffs on Chinese electric vehicles ranging from a minimum of 17.4 percentage points to a maximum of 38.1 percentage points per company. Despite the tariff issue, BYD's stock price surged the previous day. Chulgun Cho, a researcher at NH Investment & Securities, said, "It is necessary to focus on the company's own competitiveness rather than external noise," and analyzed that "the impact of Europe's tariff imposition is limited."

On the 12th, the European Union announced that it would increase the existing 10% tariff on Chinese electric vehicles by an additional 17.4 to 38.1 percentage points per company. This provisional tariff will be applied from July 4 if negotiations with relevant Chinese authorities do not proceed well, and if approved by the 27 EU member states in the second half of this year, it is expected to be implemented for the next five years.

Despite the news of Europe's tariff imposition, BYD's stock price rose 5.8% in Hong Kong and 4.2% on the mainland the previous day. This is analyzed to be due to expectations that BYD's additional tariff of 17.4 percentage points is lower than that of Shanghai Automotive (38.1 percentage points) and Geely Automobile (20 percentage points), the top two Chinese companies exporting cars to Europe in 2023, which could actually expand BYD's market share in Europe. Tesla made in China is also expected to face an additional tariff of 21 percentage points, and even if BYD is subject to an additional 17.4 percentage points tariff, it has secured cost competitiveness compared to competitors. Meanwhile, BYD is promoting the construction of a factory in Hungary and is planning to build a second factory in Europe. The impact of European regulations on BYD's sales volume is expected to be limited.

The issue of tariffs imposed by Europe on China, following the United States, has been known for a long time, and related concerns have already been sufficiently reflected in the stock price. The tariff announcement, which is better than expected, acted as a positive factor for BYD's stock price. While steady sales growth continues in China, BYD plans to expand its electric vehicle export volume from about 240,000 units in 2023 to 1 million units by 2025.

Massive research and development investments are leading to enhanced product competitiveness, and cost reduction effects through vertical integration are appearing faster than expected. In May of this year, BYD launched the plug-in hybrid model Jin (approximately 20 million won), which boasts a global top-level engine thermal efficiency of 46%, fuel efficiency of 34 km, and a maximum driving range of 2,100 km. In June, BYD was selected as an L3 autonomous driving pilot operator by Chinese authorities, narrowing the technological gap with leading companies.

This content was produced with the assistance of AI translation services.