UBS has released a research report stating that BYD COMPANY (01211) achieved a return to year-on-year sales growth in May, the first such occurrence since last September, a performance that surprised the market. There are signs of improvement in both domestic market share and quarterly profit expectations. Consequently, the bank has raised its H-share price target from HK$128 to HK$135, maintaining its "Buy" rating.

UBS indicated that since the rise in oil prices in March, electric vehicle demand in markets outside China has been strengthening. It is increasingly likely that the company's full-year overseas sales will surpass the target of 1.5 million units. Strong demand coupled with industry-wide transportation capacity constraints may help support pricing and profitability in overseas markets.

The report further noted that BYD's domestic market share in May has stabilized and rebounded on a sequential basis. The bank believes that weak domestic demand and intense competition will drive industry consolidation, which will benefit BYD in the long term. The report points out that the company's current fundamentals are stronger than they were four months ago, and the recent announcements regarding mass production of its 4nm autonomous driving chip and robotics-related initiatives are not yet reflected in the stock price.