It has not been an auspicious year for the initial public offering market in Hong Kong. Even the hype leading up to the listings of BOC Hong Kong (Holdings) and CK Life Sciences Int'l (Holdings), by far the most talked about debuts of the year, has not been translated into reality as both stocks have struggled to stay above water. Although mainland battery manufacturer BYD had a quieter debut when it listed on July 31, its performance has been more impressive. The H share, which had an IPO price of HK$10.95, peaked at $15.65 on Wednesday before profit takers crept in and sent it back to a still impressive $14.90 at Friday's close. Analysts are divided over the stock and the pace of its rise. Some say the company - which today reports its first interim results since listing - is growing strongly from a low base and deserves to trade at a premium to traditional manufacturers. Others say the stock is just a battery manufacturer and should trade in line with second-line industrial stocks. ABN Amro analyst Michele Mak said the stock was trading at 12.6 times forward earnings, but she made it quite clear which side of the fence she sat on. 'We came away from a meeting with management last week even more positive than we were before the IPO, when we advised investors to subscribe to the new issue,' she said, slapping an $18.50 price target on the company. BYD is the world's fourth largest manufacturer of lithium-ion batteries - the mainstay of the mobile handset industry - by sales. While its overall market share by value is only 4 per cent, according to ABN Amro, it offers another example of how the mainland's low-cost labour pool is giving foreign manufacturers a run for their money. In a review of the mainland rechargeable battery market, UBS Warburg's Fung Ee-lim said: 'Rechargeable batteries, a key component of portable devices including mobile handsets, have long been dominated by Japanese producers. However, Chinese producers, led by BYD, are beginning to become a major force in lithium-ion batteries.' The threat is a clear-cut one. Ms Mak said BYD's labour-intensive manufacturing base meant its cost structure was about 40 per cent below that of the Japanese manufacturers, which relied on automated production processes and thus higher depreciation charges. She said the company could hold its own in a quality comparison with Japanese competitors. The handset producers certainly think so. BYD's shipments to Motorola accounted for 8 per cent of the United States firm's battery sourcing needs last year. This year, it is expected to jump to 35 per cent and next year, 60 per cent. BYD management told Ms Mak the company would supply 10,000 units to global handset leader Nokia this month and expected this initial order to climb to one million units per month by the end of this year or early next. Analysts said that with the ongoing technology slump, competition was set to heat up as more companies relocated to the mainland to take advantage of cheap labour and as domestic producers geared up to face the onslaught of foreign competition. However, as the industry leader in China, BYD is poised to reinforce its position. Even in current market conditions, ABN Amro is expecting earnings to grow 166 per cent this year to 560 million yuan (about HK$524.88 million) and a further 25 per cent next year.