According to a recent research note, UBS has increased its price target for BYD COMPANY (HKG: 1211) from HK$128 to HK$135, while reaffirming its "Buy" rating.

The bank noted that BYD's vehicle sales returned to year-on-year growth in May, marking the first such increase since September of last year, a performance that positively surprised the market. The report indicated signs of improvement in the company's domestic market share and quarterly profit outlook.

UBS analysts pointed out that since the rise in oil prices began in March, electric vehicle demand in markets outside of China has been strengthening. This trend makes it increasingly likely that the company's full-year overseas sales will surpass its target of 1.5 million units. The combination of robust demand and industry-wide constraints on shipping capacity could help support pricing and profitability in international markets.

The report further stated that BYD's domestic market share stabilized and began to recover month-over-month in May. The bank believes that the current weakness in domestic demand and intense competition will drive industry consolidation, which is expected to benefit BYD over the long term.

UBS concluded that the company's fundamental position is stronger now than it was four months ago. Additionally, recent announcements regarding the mass production of a 4nm autonomous driving chip and related robotics initiatives have not yet been reflected in the stock price.