Byd Company Limited released its 2026 interim report on the evening of August 28. Due to a significant decline in first-quarter performance, this financial report is hardly impressive. In the first half of the year, Byd's revenue fell 7.13% year-on-year to 344.815 billion yuan, while net profit attributable to shareholders decreased by approximately 3.2 billion yuan to 12.325 billion yuan, a drop of 20.54%. During the same period, the company's net margin stood at 3.58%, hitting a four-year low for the first half of the year.

However, providing some relief, Byd's second-quarter results showed a clear recovery. Quarterly net profit attributable to shareholders reached 8.241 billion yuan, up 29.66% year-on-year and roughly doubling quarter-on-quarter. The gross margin climbed to 18.88%, the highest in the past five quarters.

Where to start with the segment data? In the first half, revenue from Byd's automobile, automobile-related products, and other product businesses fell 8.98% year-on-year, but the gross margin increased by 1.98 percentage points. This is attributed to both the deepening of the company's premiumization strategy and the stellar performance of its overseas operations. During the period, Byd's automobile exports reached 792,000 units, a year-on-year increase of 67.8%. Meanwhile, overseas revenue grew 33.92% to 181.268 billion yuan, with its revenue share surpassing domestic revenue for the first time.

However, during the same period, Byd's revenue from its China operations fell 30.68% year-on-year, with its revenue share decreasing by approximately 16 percentage points. Previously, Byd's Chairman Wang Chuanfu publicly stated that overseas markets offer a healthier competitive environment, with significantly higher gross margins than domestic markets, and the "high-profile, high-impact" strategy is proving effective.

It is noteworthy that Byd's research and development intensity saw a rare decline in the first half of the year. R&D investment during the period was approximately 28.861 billion yuan, down 6.54% year-on-year. R&D expenses were 23.307 billion yuan, a year-on-year decrease of 21.25%, and the R&D expense ratio was 6.76%, down about 1 percentage point.

Both Revenue and Net Profit Declined in the First Half, but Second-Quarter Profits Rebounded

According to Byd's latest financial report, the company achieved revenue of 344.815 billion yuan in the first half of the year, down 7.13% year-on-year. Net profit attributable to shareholders was 12.325 billion yuan, down 20.54% year-on-year. Non-GAAP net profit was 12.373 billion yuan, a year-on-year decrease of 9.02%.

Although the overall performance remained under pressure in the first half, a quarter-by-quarter analysis suggests Byd may have reached an inflection point. In the first quarter, Byd's revenue declined 11.82% year-on-year to 150.225 billion yuan, and net profit attributable to shareholders plummeted 55.38% to 4.085 billion yuan. In the second quarter, revenue continued to decline, down 3.15% year-on-year to 194.59 billion yuan. However, net profit attributable to shareholders reached 8.241 billion yuan, up 29.66% year-on-year, while non-GAAP net profit grew 51.54% to 8.226 billion yuan.

Looking at a longer timeline, this marks the first time in five quarters that Byd's net profit attributable to shareholders has returned to positive year-on-year growth. Notably, exchange losses continued to significantly impact Byd's semi-annual performance. The financial report shows that the company recorded exchange losses of 4.703 billion yuan in the first half, a difference of 7.863 billion yuan compared to the exchange gains in the same period last year. Affected by exchange losses and other factors, Byd's financial expenses surged to 5.096 billion yuan, compared to -3.247 billion yuan in the same period last year.

Breaking down by segment, revenue from Byd's automobile, automobile-related products, and other product businesses was 275.341 billion yuan in the first half, down 8.98% year-on-year, with its revenue share dropping from 81.48% to 79.85%. The gross margin for this segment was 22.33%, up 1.98 percentage points year-on-year. Meanwhile, revenue from Byd's electronic and other product businesses was 69.405 billion yuan, up 0.96% year-on-year, with its revenue share rising to 20.13%. The gross margin for this segment was 5.04%, down 2.67 percentage points year-on-year.

Overall, the revenue decline in the automobile and related products segment dragged down Byd's overall first-half revenue, but the increase in gross margin helped push the company's overall gross margin up 0.84 percentage points to 18.85%. However, Byd's net margin in the first half was only 3.58%, the lowest for the same period in four years.

The decline in Byd's vehicle sales was the most direct factor behind the revenue reduction. In the first half of the year, Byd sold 1.8085 million new energy vehicles cumulatively, a year-on-year decrease of 15.72%, selling nearly 340,000 fewer vehicles than in the same period last year. Regarding the sales decline, Chairman Wang Chuanfu offered a clear explanation: "The current sales volume falling short of expectations is mainly related to insufficient production capacity of the second-generation blade battery, which is still ramping up. This year's sales depend on battery production."

Business Structure Continues to Optimize, Overseas Revenue Surpasses Domestic for the First Time

Behind the decline in automotive business revenue and the rise in gross margin, Byd's product structure may be continuously improving. In its semi-annual report, Byd also stated that its globalization and premiumization strategies achieved leapfrog breakthroughs in the first half, with significant results in optimizing its automotive business structure.

Byd pointed out that for overseas markets, according to data from the China Association of Automobile Manufacturers, the company exported 792,000 vehicles during the period, a year-on-year increase of 67.8%. Exports accounted for a significantly larger share of total sales, exceeding 40%.

In the domestic market, despite intensifying competition and temporary demand pressure in the first quarter, the company's Fangchengbao, Denza, and Yangwang brands, driven by continuous iterations of new technologies and products, saw combined sales increase 61% year-on-year, raising their share of the group's total passenger vehicle sales to 12.8%, further deepening the premiumization strategy.

Reflected in financial data by region, in the first half of the year, Byd's China operations generated revenue of 163.547 billion yuan, down 30.68% year-on-year. The revenue share was 47.43%, a decrease of approximately 16 percentage points year-on-year. Meanwhile, the company's overseas business achieved impressive results in the first half, with revenue growing 33.92% year-on-year to 181.268 billion yuan, raising its revenue share to 52.57%, surpassing domestic business for the first time and increasing by about 16 percentage points year-on-year.

During the same period, Byd's overseas business gross margin was as high as 21.71%, about 6 percentage points higher than its domestic business, significantly boosting the company's profitability. According to Byd's latest sales data, overseas sales continued to perform well in July, with monthly sales reaching 419,200 units, of which exports accounted for 180,500 units, representing 43.07% of total sales.

Byd revealed that in terms of regional布局, its overseas operations currently cover over 120 countries and regions worldwide, achieving new energy vehicle brand sales championships in key markets such as the UK, Brazil, and Thailand. With production capacity gradually being released in Thailand, Brazil, Uzbekistan, and other locations, and overseas channels expanding, the overseas segment has become an important engine driving the company's performance growth.

Brazil is one of the most representative markets in the overseas layout. In July, the 100,000th vehicle rolled off the production line at the Brazilian factory, which is Byd's largest overseas production base. It currently employs over 5,500 people, with a designed annual production capacity of 150,000 units in the first phase and a long-term planned annual capacity of 600,000 units. In the first half of the year, the company sold nearly 100,000 vehicles in the Brazilian market, up 107% year-on-year.

Cumulative R&D Investment Exceeds 240 Billion, But First-Half Spending Rarely Declines

In this semi-annual report, Byd emphasized that it adheres to high R&D investment, ranking first among A-share listed companies for two consecutive years. As of the end of 2025, cumulative R&D investment exceeded 240 billion yuan, with over 120,000 R&D personnel. This sustained high-intensity R&D investment has also earned Byd a substantial patent reserve. By the end of last year, the company had accumulated over 71,000 global patent applications and over 42,000 granted patents.

However, in the first half of this year, Byd's R&D investment was approximately 28.861 billion yuan, down 6.54% year-on-year. R&D expenses were 23.307 billion yuan, a decrease of about 6.3 billion yuan year-on-year, or 21.25%. By quarter, R&D expenses in the first and second quarters were 11.344 billion yuan and 11.964 billion yuan, respectively, down 20.24% and 22.18% year-on-year. In 2025, Byd's average quarterly R&D expense was approximately 14.5 billion yuan, indicating a noticeable reduction in R&D intensity this year.

Overall, in the first half, Byd's R&D investment accounted for 8.37% of total revenue, roughly flat year-on-year, while the R&D expense ratio was 6.76%, down about 1 percentage point. In its semi-annual report, Byd stated, "In the face of the global clean energy transition and the wave of intelligence, the company continues to increase investment in technological innovation and persistently adheres to high-intensity R&D investment," but did not explain the specific reasons for the decline in R&D investment.

This is the first time in recent years that Byd has seen a year-on-year decline in semi-annual R&D expenses, and it is also the first time it has experienced consecutive quarterly year-on-year declines in R&D expenses. A financial professional in the automotive industry analyzed that if a company's R&D expenses decrease, there is a possibility of reduced investment in technological innovation.

For comparison, in the first half, Geely Automobile's R&D expenses were 9.199 billion yuan, up 25.5% year-on-year, with an R&D expense ratio of 5.3%, an increase of about 0.4 percentage points year-on-year. Among new forces representatives, Li Auto, despite a net loss of 4 billion yuan in the first half, had R&D expenses of 5.498 billion yuan during the period, up 3.26% year-on-year, with an R&D expense ratio of 11.3%, an increase of nearly 2 percentage points year-on-year.

Radar Finance will continue to monitor Byd's subsequent development.