Profit had just returned to the ten-billion-yuan level, and BYD Company Limited (002594) once again ramped up its investment.
The third-quarter report disclosed on October 29 showed that BYD Company Limited (002594) posted third-quarter revenue of RMB 221.488 billion, up 13.59% year on year; net profit attributable to shareholders of RMB 10.020 billion, up 28.08% year on year; and non-GAAP net profit attributable to shareholders of RMB 8.630 billion, up 25.25% year on year. Revenue and net profit attributable to shareholders rose 13.82% and 21.58% respectively quarter on quarter.
In the first three quarters, BYD Company Limited (002594) recorded revenue of RMB 566.304 billion, essentially flat from a year earlier, and net profit attributable to shareholders of RMB 22.345 billion, down 4.24% year on year.
In the same quarter, cash paid by BYD Company Limited (002594) for the purchase and construction of fixed assets, intangible assets and other long-term assets reached RMB 42.676 billion, up 88.49% quarter on quarter and nearly matching the RMB 44.703 billion spent in the entire first half. Cumulative spending in the first three quarters was still about 24% lower than a year earlier, but payments clearly accelerated once the third quarter began. Among the segment capital expenditure disclosed for the first half, automobiles and related businesses accounted for 96.4%, with the investment focus still on the vehicle manufacturing system.
The expansion of fast-charging models is one traceable thread. At the June shareholders' meeting, BYD Company Limited (002594) Chairman Wang Chuanfu explained that the second-generation blade battery was in a transition period between old and new production lines, and capacity ramp-up could not keep pace with orders. At the time, supply chain sources indicated that due to process adjustments, capacity for high-end models was expected to ease only in the third quarter.
BYD Company Limited (002594) has a massive production scale, but new batteries and new models still have to go through equipment modification and production line running-in. The interim report disclosed that about RMB 13.2 billion of net-value machinery and equipment was transferred from fixed assets to construction in progress in the first half, reflecting that some existing equipment re-entered the construction and renovation process. For BYD Company Limited (002594), which makes its own batteries, investment in new technology generations extends all the way to the cell production stage.
The Xixian power battery base covers cell and battery pack production, moving from trial production in March to full completion and commissioning by the end of September. Earlier expectations of supply relief in the third quarter also began to be confirmed by model sales: the Datang, equipped with the new technology, reached sales of 11,010 units in August.
In the third quarter, BYD Company Limited (002594) sold a total of 1.3231 million vehicles, up nearly 20% quarter on quarter. Pure electric passenger vehicles contributed the vast majority of the increment, selling about 205,400 more units quarter on quarter and accounting for more than 95% of the increase in passenger vehicle sales. In its September investor relations record, the company mainly attributed the earlier sales recovery to the launch of new models represented by the fast-charging series. Other models and exports also contributed to the 205,400-unit increase.
Along with the new cars, fast-charging stations have also been rolled out. By the end of June, BYD Company Limited (002594) had built 7,018 fast-charging stations, and by August 28 the number had increased to 10,000. The half-year report of contractor CCCC Design also disclosed winning bids for the construction of BYD Company Limited's (002594) station-within-a-station fast-charging projects in East China and North China. For fast charging to become a deliverable selling point in daily vehicle use, owners must be able to find sufficiently convenient stations. Beyond factories, charging equipment and installation construction also cost money.
Overseas spending cannot be ignored either. In the third quarter, BYD Company Limited (002594) exported 550,700 vehicles, with the year-on-year export increment exceeding the company's total sales increment. More cars are being sold overseas, but local factories have not yet been completed. Although the Camacari base in Brazil has begun assembling vehicles, BYD Company Limited (002594) still disclosed in September that its welding, painting and stamping plants were in the final stages of construction. On September 3, the Subang plant in Indonesia also officially opened, with a designed annual capacity of 150,000 vehicles.
Third-quarter net profit attributable to shareholders rose by RMB 1.779 billion quarter on quarter, while the net amount of non-recurring gains and losses increased by RMB 1.374 billion, accounting for about 77% of the quarter-on-quarter increase in net profit attributable to shareholders; a turnaround from loss to profit in financial asset-related gains and losses was an important source. Non-GAAP net profit attributable to shareholders rose only 4.92% quarter on quarter.
The group's gross margin, including businesses such as electronics, also fell to 18.01% from 18.88% in the second quarter. At the same time, the balance of construction in progress rose to RMB 79.181 billion, an increase of RMB 10.191 billion from the end of June. These assets will later be transferred to fixed assets and gradually enter depreciation costs. With profit margins under pressure, BYD Company Limited (002594) needs a larger production and sales scale to dilute the newly added fixed costs.
The expanded sales scale is also tying up more working capital. The quarterly report mainly attributed the increases in inventory and accounts receivable from the beginning of the year to overseas business and stocking needs. In the third quarter alone, the two balances increased by RMB 31.587 billion and RMB 6.346 billion respectively.
BYD Company Limited (002594) is still accelerating construction payments, betting that new technologies and overseas markets can bring sustained demand. Updating battery production lines domestically and filling in manufacturing processes overseas, this expansion path also binds it more tightly to sales in the coming years. Once capacity is built, long-term stable orders will be needed to absorb it.
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