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SCMP Reporter

China's largest rechargeable battery maker, BYD, beat forecasts by posting a 213 per cent growth in net profit to 658.3 million yuan (about HK$618.01 million) last year due to market share expansion and a shift to higher margin products.

The results exceeded the company's estimates by a wide margin, and also beat brokerage consensus forecasts.

BYD had forecast a 560 million yuan net profit.

Thomson First Call Consensus Estimates said BYD's net profit could surge 174.29 per cent to 577.39 million yuan, with the highest forecast at 625 million yuan.

Turnover rose 75.5 per cent to 2.29 billion yuan.

Credit Suisse First Boston attributed the strong results largely to the growth of the company's lithium-ion battery business, which had a gross margin of 50 per cent.

The contribution from lithium-ion batteries to BYD's turnover was estimated to have grown from 43.08 per cent in 2001 to about 50 per cent last year.

BYD manufactures and supplies lithium-ion batteries to leading mobile-phone makers such as Motorola and Nokia, and nickel-cadmium batteries to power-tool makers such as Techtronic, Bosch and Makita.

A JP Morgan report said the results exceeded expectations because BYD increased its shipments to Motorola and achieved better economies of scale.

The company's shipments to Nokia grew from 20,000 units a month to between 200,000 and 400,000, according to a China International Capital report quoting BYD management.

BYD said it would probably begin supplying Nokia's manufacturing plants outside China this year.

Earnings per share for the full year were 1.46 yuan.

A final dividend of 28.4 fen will be paid.

Once a favourite of fund managers, BYD is now expected to face challenges in the battery business and higher risks from exposure to the unfamiliar mainland car business after acquiring a 77 per cent stake in a mainland small-car maker last month.

A Kim Eng brokerage report said BYD might not be able to sustain its high gross margin of more than 30 per cent of the past two years.

'Given the high mobility requirement for handsets and notebook computers, the demand has now shifted to higher quality and smaller-sized batteries that involve higher production specifications. We believe it may be difficult for BYD to compete,' the report said.

BYD shares yesterday closed 1.7 per cent lower at HK$14.45.

Graphic: byd15gbz



BYD beats earnings forecasts with  a 213pc profits surge to $618m