BYD shares rise as electric taxis hit Hong Kong roads
Stock gains 3.5 per cent but analysts say rally not based on hopes of strong sales growth
The price of BYD's shares rose to a two-year high yesterday following the launch of the carmaker's electric taxis in Hong Kong on Wednesday.
Analysts attributed the rally to more of a concept than expectations of strong sales growth.
BYD shares rose as much as 6.3 per cent to HK$35.35 before closing 3.46 per cent ahead at HK$34.40. The stock has gained 48 per cent so far this year.
The first six of BYD's 45 electric taxis will begin service in the city today. BYD's chairman Wang Chuanfu said in March he expected the fleet to grow to 1,000 taxis next year and 3,000 by the end of 2015.
BYD is renting the 45 cars to taxi companies, which then sublet the vehicles at HK$8,000 each per month.
It remained unclear if the companies would buy the HK$400,000 vehicle after the end of a six-month trial period.
John Lu, an analyst with Guosen Securities, said it did not matter if the electric taxis could be sold.
"Even if BYD can really sell 3,000 e-taxis in the next two years, it still makes up less than 5 per cent of its revenue. A success story built on electric vehicles is still pretty much a concept at this stage," Lu said.
While the company's new petrol models S6 and Surui have been quite a big hit, many analysts said it was difficult to predict the company's performance as its business was diversified, with interests ranging from handset components to photovoltaic products.