BYD Co makes rechargeable batteries and cars in Shenzhen in Guangdong province. Founded in February 1995, and listed in Hong Kong in 2002, the origin of the company’s name is uncertain, with some saying it could simply be an acronym based on its Chinese name or from the phrase “build your dreams”. BYD’s profile was raised in 2008 when a unit of billionaire Warren Buffett’s Berkshire Hathaway invested about US$230 million in BYD.
BYD profit forecast to plunge in quarter
Shares in Shenzhen carmaker BYD fell 11.8 per cent yesterday after the company forecast its smallest profits in a year next quarter, despite bumper profits in the first half.
The stock closed HK$3.80 lower at HK$28.45.
Shares in subsidiary BYD Electronic also fell sharply, by 11 per cent to HK$3.55, making the two stocks among the worst performers of the day, while the market rose 0.65 per cent.
BYD is best known for its electric vehicles, including Hong Kong's electric taxis.
Its first-half profit rose 26-fold to 427 million yuan (HK$540.8 million) because of strong petrol car sales.
Although sales grew 25 per cent to 250,000 units in the first half, BYD expects profits to fall to between 3 million yuan and 50 million yuan in the third quarter.
Chairman Wang Chuanfu said third-quarter profit would be affected by a seasonal downturn in car sales, a drop in mobile-phone orders in an increasingly competitive smartphone market and continued losses from the new-energy arm of the business, although losses were narrowing.
Wang also said he was confident car sales would rebound in the fourth quarter, the industry's peak season, and government subsidies would drive growth.
Selling batteries for mobile phones is an important revenue stream for the carmaker.
"Looking at the second half of 2013, the automobile industry will still face uncertainties. Nevertheless, with the steady progress of urbanisation and improvement in residents' living standards, there is huge room for growth potential in automobile demand in third and fourth-tier cities," Wang said.
Asked if BYD was threatened by Tesla's entrance into the Chinese market, Wang said the US firm was not a direct competitor as Tesla manufactured luxury cars while BYD produced vehicles mainly for public transport. He said the presence of another electric carmaker would have a positive effect on the industry.