BYD aims to spin off handset parts business
BYD, the mainland's largest maker of rechargeable batteries, said it intended to sell shares in its handset component business and seek a separate listing for the unit to help it benefit from the industry's potential for rapid growth.
UBS will lead the share sale, with the aim of securing a listing in Hong Kong by August or September, a market source said.
'BYD Electronic will become a direct competitor of Foxconn International Holdings,' said Frederick Wong, an analyst at BNP Paribas Group, who recommended BYD shares as a 'buy'.
'The spin-off can help BYD to lower its debt-to-equity ratio and strengthen its management team in the handset business.'
Hong Kong-listed Foxconn is the main handset supplier for Nokia and Motorola.
BYD's wholly owned handset subsidiary, BYD Electronic, had submitted an advance booking form for an application for a separate main board listing, BYD said in a statement to the Hong Kong stock exchange yesterday.
The company said in November that it planned to transfer 9 per cent of the unit to 35 employees as a performance incentive.
The stake is worth about 86 million yuan.
'It is intended that assured entitlement to certain shares of BYD Electronic will be provided to the qualified shareholders, subject to certain conditions,' BYD said. 'The company's stake in BYD Electronic will be reduced to approximately 67.35 per cent immediately following the global offering.'
BYD on Tuesday said its revenue from handset parts, including keypads, camera modules and liquid crystal display screens, rose 169 per cent to 5.13 billion yuan last year.
The turnover accounted for 39 per cent of total sales last year.
Shares of BYD, which have gained 130 per cent in the past 12 months, closed 0.69 per cent higher at a record HK$36.75 yesterday.
