Morgan Stanley: BYD's inventory digestion is nearing the end, and overseas sales may become the growth engine

Morgan Stanley stated that BYD's stock price has fallen 30% since its peak in May, mainly due to disappointing performance and lowered guidance. The firm believes that inventory digestion is nearing completion, and the impact of anti-involution policies will gradually weaken, maintaining an overweight rating on the stock. Looking ahead to 2026, it is expected that BYD's overseas sales will reach 1.6 million to 1.8 million vehicles, a year-on-year increase of 68% to 89%. Although this target is challenging, it is still achievable. It is expected that BYD's overseas production capacity will grow by about 50% over the next three years; the increase in the proportion of overseas sales will help improve overall profit margins