Analysis of BYD 2020 Annual Report: New Energy is the Growth Engine

In 2020, The COVID-19 outbreak dealt a heavy blow on the global economy, but the New Energy Vehicle industry has embraced a good time. As Tesla sales volumes booming, the market capital of Tesla has also skyrocketed in 2020. Other NEV vendors has a similar journey, such as BYD, NIO, xPeng, etc.

However, we should not take BYD just as NEV vendor. BYD has played a significant role in industries related to electronics, automobiles, new energy and rail transit. From energy generation and storage to its applications, BYD is dedicated to providing zero-emission energy solutions.

Let’s look at BYD key financial data in 2020 and compared with last four year.

From the above graph, we can see that the revenue keep growing during the five years, however, the gross profit and net profit is not stable. The gross profit and net profit margin is relatively low. That shows BYD faced fierce competition and expand the market share in the last five years.

The main products of BYD are divided into three categories as follows:

In 2020, BYD recorded a revenue of approximately RMB153,469 million, representing a year-on-year increase of 26.02%, among which, the revenue from the automobiles and related products, and other products amounted to approximately RMB81,958 million, representing a year-on-year increase of 37.66%; the revenue from the mobile handset components, assembly service and other products amounted to approximately RMB59,354 million, representing a year-on-year increase of 13.01%; and the revenue from the rechargeable batteries and photovoltaic business amounted to approximately RMB11,705 million, representing a year-on year increase of 20.44%. 

A very good sign is that the overseas market share is expanding fast, which means BYD products has successfully won more and more global customers recognition. 

Next, Let’s see each product categories performed in 2020. 

Automobiles and related products, and other products: 

In the field of new energy passenger cars, BYD based on the advanced technologies and the customer-centered mindset to constantly launch market-competitive models. Therefore make steady progresses on the way of brand premiumlization. In 2020, BYD unveiled the brand-new flagship model “Han” and the revamped flagship SUV “Tang”, which won the favor of the market and consumers. With the drivers of 2 flagship models, the sales volume’s percentage of RMB200,000 above grew significantly. Among them, the sales volume of model “Han” has kept rising steadily since its launch in July. Model “Han” is the very first high-end C-class sedan that recorded a monthly sales over 10,000 units in China’s automobile industry. The brand- new flagship Model “Han” are the world’s first model equipped with the BYD’s new-generation power battery “blade battery”. The “blade battery” was released in March of the year. It has six technological innovations including super safety, super durability, super traveling range, super strength, super power, and ultra-low temperature performance.

In 2020, BYD unveiled the world’s first customized model “D1”of the online car-hailing nature in November, which had been jointly created by the Group and DiDi. Model “D1” is an intelligent ride-sharing new species, tailored to satisfy the unique needs of the online ride-hailing market. The model were created by the Group and DiDi by leveraging their respective unique advantages in the electric automobile, ride-sharing fields and the demand and travel data of 550 million passengers and a great many drivers on the DiDi platform.

In the field of pure electric buses, due to the impact of the COVID-19, market clearing is accelerated, and the industry concentration further increased. By relying on the long-term established good reputation and brand image, the Group acts faster to expand the domestic and overseas markets. In the domestic market, through market expansion, service model improvement and other strategies, the Group has not only entered a number of cities including Chengde, Zhenjiang, Yichang, Yongzhou, etc., but also deepened its market operations in Shenzhen, Guangzhou, Changsha, Tianjin, etc. In overseas markets, although the COVID-19 has wreaked havoc, the Group’s overseas business has still achieved rapid growth. During the Year, BYD completed the delivery of orders to the United Kingdom, Sweden, Germany, and other countries. In the European market, the Group’s market share of pure electric buses exceeded 20%. In 2020, the sales volume of the Group’ s electric buses grew against downtrend, and the market share of electric buses further increased.

In the field of traditional fuel-engined vehicles, BYD released the “Song Plus” fuel version in September 2020. Model “Song Plus” is the first model equipped with BYD’s new-generation 1.5Ti highpower powertrain. Since their launch, they have been widely praised by the market, which boosts the hot sales of “Song” series products and drives the growth of the Group’s fuel-engined vehicle business against the downtrend.

In the field of urban rail transit, breakthroughs have been made in the two major “SkyShuttle” projects in the Bishan District of Chongqing and the Pingshan District of Shenzhen. Meanwhile, the Group acquired the Contracts in Salvador and Sao Paulo, the famous cities of Brazil respectively in 2020.

In 2020, BYD became the shareholder of Allystar Technology (Shenzhen) Co. Ltd., Canadian Solar Inc., Hunan Yuneng New Energy Battery Material Co., Ltd. and other core companies along the industry chain. In aspect of high-precision navigation, the Company carried out in-depth cooperation with Allystar, to strengthen its layout in intellectualization and differentiation based on chip technology; in aspect of new energy industry, the Company and Canadian Solar Inc. reached a consensus that the photovoltaic industry and the business model of “photovoltaic+energy storage integration” have a promising prospect, further more, they committed to jointly provide first-class solutions for global photovoltaic development; in aspect of battery industry, leveraging the strategic synergy in the upstream and downstream of the industrial chain of Hunan Yuneng, the Group’s competitive advantage will be enhanced.

Mobile handset components, assembly service and other products

As a world-leading platform for high-end manufacturers, BYD provides customers with the development of new materials, product design and development, components and machine manufacturing, supply chain management, logistics and after-sales service and other one-stop services. The Group’s businesses covers from smartphone and PC, new intelligent product, automotive intelligent system and healthcare. The Group, thanks to the world-leading R&D and manufacturing capabilities, diversified product portfolios, and close strategic customer relationships, has entered a new cycle of rapid growth.

In 2020, the Group’s market share in Android customers and key customers in North America further increased, and the business continued to expand, in particular, the rapid growth of glass and ceramic product shipments; the introduction of new customers in the new smart product sector, which greatly increased the business scale and opened up new growth space. The development of smart automotive systems business outperforms the market. At the same time, BYD promoted lean production, reduced costs and increase efficiency, with the overall operational efficiency further improved. With the optimization of the product mix and the improvement in the overall operational efficiency, the profitability of the Group has also been enhanced. During the Period, the revenue of the Group in the mobile handset components, assembly service and other products was approximately RMB59,354 million.

Rechargeable batteries and photovoltaic business

BYD rechargeable batteries mainly include lithium-ion batteries and iron batteries products, which are widely used in mobile phones, electronic tools and other portable electronic devices. During the Year, the Group’s traditional battery business achieved steady growth. In respect of photovoltaic business, the Group actively explored the global market and achieved steady growth in sales revenue. During the Year, the revenue of rechargeable batteries and photovoltaic business was about RMB11,705 million.

As CEO Wang Chuanfu said in the annual report: In the coming future, BYD will continue to take new energy vehicles and urban rail transit business as important strategic development direction and provide cites with comprehensive solutions for pollution control and congestion issue, devoting itself to the performance of corporate social responsibility fully by addressing the issues of urban air pollution and traffic congestion that exist universally.

The new energy will be the growth engine for BYD in the future. 

 

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