BYD Q1 Earnings Preview: Profit Bottoming Imminent

In the first quarter of 2026, BYD found itself at a strategic crossroads in the adjustment of the domestic automobile market and the rapid expansion overseas. The withdrawal of new energy subsidies has caused domestic market sales to experience sharp pain, while the overseas market has become the core engine of growth with a doubling rate. Based on forecasts from more than 20 mainstream institutions including Goldman Sachs, Nomura Securities, and CITIC Securities, the market has reached a key consensus in the divergence of performance - the first quarter is likely the **absolute bottom** of BYD's current profit cycle, and the core value of the financial report is not the short-term data fluctuations, but the verification of the two long-term logics of "high overseas margins to offset domestic entrenchment" and "technology premium reshaping product cycle".

Confirming the Bottom Amid Performance Expectation Divergence, Expectations for Earnings Repair in Each Quarter

There is a clear divergence in the forecasts of BYD's first-quarter performance by various institutions, yet the core judgment is highly unified. The divergence in performance primarily stems from different assumptions regarding the intensity of domestic price wars and fluctuation in raw material costs. 25 mainstream institutions provided a wide range of earnings forecasts: net profit is expected to fall between **36.3 billion yuan and 50.7 billion yuan**, with a median around 42.1 billion yuan; revenue scale is projected to be between **872.6 billion yuan and 990.8 billion yuan**, with an average around 930.7 billion yuan.

Conservative foreign institutions worry about the decline in domestic wholesale sales on a quarter-on-quarter basis and the surge in financial expenses, setting net profit expectations in the range of 36-40 billion yuan; optimistic domestic institutions represented by CITIC Securities and China Merchants Securities, based on higher than expected overseas sales and the release of high-end models, believe the net profit could reach a high of 47-50.7 billion yuan. Despite the differences in data forecasts, all institutions unanimously identified the first quarter as the "darkest hour" for earnings, and Dahua Ji Xian Securities directly upgraded the rating from "Sell" to "Buy", targeting a price of 134 Hong Kong dollars.

In terms of the rhythm of profit repair, institutions estimate that the net profit margin in the first quarter may fall to around **3.7%**, a cyclical low, and will climb quarter by quarter from the second to the fourth quarter, with expectations of returning to around 4.8% by year-end. On the gross margin front, using a Goldman Sachs model, even though the revenue in the first quarter is under pressure from fluctuations in sales volume, due to economies of scale and the reduction of battery costs, the overall gross margin could still stabilize in the **17.6%-17.9%** range, demonstrating strong profitability resilience. For the market, the core significance of the first quarter's results is to confirm the cyclical low of earnings, even if the year-over-year growth rate slows down due to a high base or if there is a quarterly decline, it is likely to be interpreted as a clean-out of negative factors, becoming an important opportunity for a reversal in stock price.

Overseas Business Delivers as the First Growth Driver, High Margins Offset Domestic Pressure

In the first quarter of 2026, BYD's overseas business officially upgraded from an auxiliary growth segment to the **first growth pole**, becoming the core support to counter domestic market entrenchment and also the most critical observation variable in this financial report.

In terms of sales volume, the overseas sales volume of BYD reached 319,800 units in the first quarter, a year-on-year increase of 55.4%; the proportion of overseas sales in total sales soared to **45.7%**, compared to 22.7% for the entire year of 2025, which means that for every two cars sold by the company, one is destined for overseas. Financially, the profitability advantage of the overseas market is particularly prominent, with the average selling price of overseas models being 30-50% higher than that of similar domestic models, and gross margins are generally maintained at above 25%, far higher than the 15-18% level in the domestic market. The high-margin structure directly drives the improvement of the overall profitability level.

On the production and delivery front, the overseas supply chain layout is gradually being implemented, with the factories in Rayong, Thailand, Bahia, Brazil, and Uzbekistan fully operational. The Szeged plant in Hungary is expected to start production before the second quarter, and the overseas delivery capability is no longer constrained by maritime bottlenecks. In terms of product structure, overseas exports have broken away from the pattern dominated by low-priced