[HSBC: Shortened payment terms are not a major problem for BYD Holdings] HSBC Global Research issued a report stating that BYD's pricing and profit margins are generally higher in overseas markets than in the domestic market due to less competition and the superior quality of BYD Co., Ltd. (01211.HK) vehicles compared to other global electric vehicle brands. The report said that recent regulatory requirements to shorten payment terms may put pressure on the cash cycle management of automakers. However, HSBC believes that this is not a major problem for BYD, although BYD's debt ratio is relatively high and its cash ratio is lower than its peers. After the recent price adjustment, BYD's orders and sales data in June both rebounded, which may be partially offset by the adverse effects of price fluctuations through its increased scale and profit contribution from overseas markets. HSBC believes that the tight price situation may continue throughout the summer off-season, but due to its market leading position, it still believes that BYD's market position is better than its peers. Therefore, it reiterates the "buy" rating and maintains the target price of HK$151 unchanged.
