BYD's H1 net profit triples, new energy vehicles take up half of the market

Editor's note: This article is from 36 Krypton's "Future Automotive Daily" (WeChat public number ID: auto-time), written by Cheng Xiaoyi.
Author | Cheng Xiaoyi
Editor | Wu Yan
With its efforts in "expanding the market for electric vehicles," BYD was recently named third on Fortune Magazine's list of "World-Changing Companies," behind Qualcomm and MasterCard, and the only car company to make the list.
On August 21, BYD released the first half of 2019 performance report. During the reporting period, the company realized operating income of 62.184 billion yuan, an increase of 14.84% year-on-year; net profit attributable to shareholders of the listed company amounted to 1.455 billion yuan, an increase of 203.61% year-on-year, and earnings per share was 0.49 yuan. Meanwhile, BYD expects net profit for the first three quarters of 2019 to be 1.555-1.755 billion yuan, up 1.83%-14.93% year-on-year.
According to the half-year report, BYD's new energy sales rose sharply in the first half of the year.The cumulative sales of automobiles in the first half of 2019 totaled 228,100 units, an increase of 1.59% year-on-year.Among them, the cumulative sales of new energy vehicles totaled 145,700 units, an increase of 94.5% year-on-year.The revenue of new energy automobile business during the reporting period was about 25.448 billion yuan, an increase of 38.771 TP3T, and its share of the Group's total revenue further increased to 40.921 TP3T. 
Despite the big increase in net profit in the first half of the year, BYD has made a conservative forecast for the third quarter of 2019 of a maximum year-on-year increase in net profit of 14.93% due to multiple factors such as the decline in market demand in the automotive industry and the significant withdrawal of subsidies for new energy vehicles, the company's sales of new energy vehicles are expected to slow down, and the overall earnings of the business will be a more substantial decline compared to the same period last year.
The latest sales snapshot shows that BYD's new energy vehicle sales in July were 16,500, down 11% year-on-year, the first year-on-year decline this year. Data from the China Association of Automobile Manufacturers (CAAM) showed that overall new energy vehicle sales growth was negative for the first time in the month, down 4.7% year-on-year to 80,000 units. In addition, the China Association of Automobile Manufacturers (CAAM) forecast for new energy vehicle sales in 2019 was revised downward from the previous 1.6 million to 1.5 million.
In the second half of the year, BYD plans to launch new models such as e2, e3 and the new Qin, which are expected to boost sales. Among them, the e2 will be officially launched in the near future, and the BYD Song Pro was launched on July 11, with sales of 7,531 units in the same month (sales period of 20 days) and orders exceeding 10,000 units in the first month, in line with market expectations.
On July 19th of this year, BYD and Toyota agreed to cooperate on the joint development of electric vehicles, jointly developing pure electric models for sedans and low-chassis SUVs, as well as the power batteries required for the above products. The new models will use the Toyota brand and are scheduled to hit the Chinese market by 2025. Citi, Credit Suisse, CICC and many other well-known brokerage firms have issued a number of "buy/hold" research reports on the cooperation. Citi pointed out in its report that Toyota's new strategy means BYD's discounted cash flow value will increase by a potential 40%.
BYD Chairman and President Wang Chuanfu has predicted in the 2019 World New Energy Conference that the domestic new energy vehicle sales growth rate this year will be about 40%, of which BYD's new energy vehicle sales growth rate for the whole year will reach 70%-80%.In the first half of the year, Wang Chuanfu increased his holdings of BYD.In the first quarter of 2019, Wang Chuanfu held 512.62 million shares, and on June 5 , BYD disclosed that Wang Chuanfu completed a 1 million share increase program. As of the end of June, the number of Wang Chuanfu's holdings remained at 513.62 million shares.
New energy vehicle business, BYD cell phone parts and assembly and other businesses in the first half of the year to achieve revenue of 23.323 billion yuan, an increase of 14.35%; secondary rechargeable batteries and photovoltaic business to achieve revenue of 4.453 billion yuan, a year-on-year decrease of 1.61%, the performance of the weaker.
(I am 36 Krypton's future automotive daily writer Cheng Xiaoyi, focusing on intelligent network connection, autonomous driving and shared mobility dynamics, always welcome to exchange. Please add WeChat chily_c, add please note name, company, position.)