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BYD Profit Expected Increased Substantially in First Half Year

 

BYD has announced its net profit has increased substantially the first time in recent 4 years. MidAmerican Energy Co. of Berkshire Hathaway Inc. of Warren Buffett holds 10% stock share of BYD. It is the most high-profile investment of Buffett in China.

BYD has been expected that its profit has achieved 500 million Yuan (81.1 million US dollar) in the first half this year. It has 16.27 million Yuan profit at the same time of last year. And BYD net profit of first quota has increased 3 times over the same period of last year.

BYD has kept investing capital from traditional business, such as auto and mobile phone battery sales into its research of electronic vehicle, solar panels and other green technologies. At present, BYD hopes to motivate its sales by new non gasoline vehicle. However, analyst points out that hybrid and pure electronic vehicle now take around 10% of its total revenue. BYD only sold 1,700 electronic cars and 700 electronic buses last year.

BYD plans to launch new non gasoline vehicle to motivate its sales. The company will launch a hybrid car- Qin in the next half this year. Besides, joint venture of BYD and Daimler AG will launch a pure electronic car in Chinese market next year. Analyst anticipates that BYD will have better performance in the next half year because vehicle sales in season at the fourth quarter. Nomura analyst Huang Leping forecasts that BYD year profit will achieve 1.16 billion Yuan this year, taking a big progress than last year 81.4 million Yuan. Huang said that his forecast is based on the BYD sales of vehicle increasing, solar panel loss decreasing and mobil phone business improvement.

According to China Association of Automobile Manufacturers (CAAM)s research, sales of passenger car is up to 12.4 million in July of Chinese market, increases 10.7% over the same time of last year, which is faster than 9.3% growth of June and 9% growth of May. It reflects Chinese consumer confident has increased stably, and it is still has a large potential market waiting for developing even economy growth of China slows down to the deepest point of 20 years.

BYDs H-share price has increased 30% this year to 30.45 (around 3.93 US dollar) Hong Kong dollar. Huang said BYD appraisement is at high level, and PE ratio is up to 50 times earning. However, if consider potential development of electronic car business in, investor would take seasonable premium normally. Huang also forecasts that BYD will have a better performance next year because of its solar panel business starts gain profit.

 

 
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