Japanese Firms Pursue Success with Localized AI Training Data

Japanese companies such as SoftBank and NTT are developing localized versions of large language models to improve their specialized AI offerings. They are conducting joint research with major finance and pharmaceutical companies to create training data tailored to the Japanese market. This strategy aims to help them compete with US and Chinese players in the generative AI market.

BYD Company Limited (BYDDY) has entered into a strategic partnership with Aeon to expand its electric vehicle (EV) sales in Japan. This collaboration allows BYD to leverage Aeon's retail channels, making its EVs accessible at approximately 30 Aeon shopping centers and stores nationwide. The partnership introduces competitive pricing, positioning BYD's vehicles as attractive alternatives to Japan's affordable kei cars. With discounts and incentives, consumers can purchase an EV for under 2 million yen ($13,300), potentially reshaping Japan's car retail landscape by shifting from traditional dealerships to lifestyle outlets.

Founded in 1995, BYD is a leading Chinese manufacturer of new energy vehicles (NEVs), targeting the growing midpriced mass-market segment in China's passenger vehicle market. In March 2022, the company discontinued production of internal combustion engine (ICE) vehicles. BYD sold about 4.3 million passenger NEVs in 2024, accounting for 35% of the Chinese passenger NEV market. The company also operates in handset components, rechargeable batteries, and photovoltaics, with over 30 industrial parks worldwide.

BYD's financial health has demonstrated robust growth, with a 52.6% revenue increase over the past three years. The company's operating margin stands at 6.06%, while its net margin is 4.97%, indicating efficient cost management and profitability. On the balance sheet, BYD maintains a debt-to-equity ratio of 0.17, suggesting a conservative approach to leveraging. However, the Altman Z-Score of 2.12 places the company in the grey area, indicating some financial stress, though not at immediate risk of bankruptcy.

Valuation metrics present an interesting picture. BYD's P/E ratio is 21.82, while its P/S ratio is 0.88, close to its 10-year low, suggesting potential undervaluation. The P/B ratio of 4.1 is also near its 1-year low, indicating a favorable valuation. Analyst sentiment remains positive, with a recommendation score of 1.5, suggesting a strong buy. Technical indicators such as the RSI of 46.37 and moving averages indicate a neutral market sentiment.

Risk assessment indicates that BYD's financial health is bolstered by a high Piotroski F-Score of 9, indicating a very healthy situation. However, sector-specific risks, such as the competitive landscape in the electric vehicle market, remain a consideration. The company's beta of 0.19 suggests low volatility, which may appeal to risk-averse investors. While the ROIC of 8.72% is less than the weighted average cost of capital, indicating potential inefficiencies, the company's strategic initiatives and market expansion efforts could serve as upcoming catalysts for growth.