Brokers’ digest
Price target:
UOB Kay Hian “buy” HK$150 Rapid progress made in rechargeable battery business
Chinese automobile and rechargeable battery manufacturer BYD is “progressing rapidly” with its new electric vehicle (EV) battery business, says UOB Kay Hian analyst Ken Lee in a Sept 29 note. Lee is maintaining his “buy” call on the company, with a raised target price to HK$150 ($26.48) from HK$95.
According to Lee, BYD will double the production capacity for its new blade battery from 13Gwh currently to 26Gwh in 2021 by adding eight new production lines at its plant in Chongqing. This is in place to meet in-house EV manufacturing and expected strong demand from external customers (Chinese and global OEMs).
“As such, we raise our 2021-2022 EPS estimates by 3% and 12% respectively,” says Lee.
BYD announced the launch of its new blade lithium iron-phosphate (LFP) battery — or blade battery — in March. Blade battery refers to a single-cell battery which can be placed in an array and inserted into a battery pack like a blade. According to BYD, only about 40% of the current battery packs’ volume contain batteries. The cells take up four-fifths of a module and modules make up 50% of the pack. With its blade batteries using cell-to-pack technology, the batteries take 60% of pack volume.
The blade battery pack also boasts 50% greater volumetric energy density. It also costs 20% to 30% cheaper than the conventional LFP battery pack, says Lee. The blade battery pack is also safer and more durable than the nickel magnesium cobalt (NCM) battery pack.
In April, BYD formed a joint venture with Toyota to conduct R&D for EVs. The EVs developed under this venture will be manufactured and sold by Toyota. BYD has also struck deals to supply batteries for major automotive corporations Ford and Daimler. — Jovi Ho