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Kandy Wong

Among Hong Kong-listed carmakers, alternative energy vehicle producer BYD has become the darling of investors who believe the Warren Buffett effect does not yet fully reflect on the company's share price. 
The aptly named carmaker - its acronym stands for Build Your Dreams - has set itself a target of becoming a global market leader in the manufacture of low-cost environmentally friendly vehicles.
Helped by a show of faith from Mr Buffett, acclaimed as 'the world's most successful investor', BYD stock surged 76 per cent in the past month and scaled a three-month high of HK$29.40 on Wednesday last week. 
A bout of profit taking then saw the price slide 10.88 per cent off that peak to end the week at HK$26.20.
'News of Warren Buffett's investment in BYD was the main factor pushing up the company's share price,' a fund manager said. 
Mr Buffett's MidAmerican Energy Holdings paid HK$1.8 billion in September last year for a 10  per cent stake in BYD in a move that analysts said further boosted the company's image among overseas investors, particularly in the United States. 
Mr Buffett's friend and long-time partner Charlie Munger told Fortune magazine last month that both he and Mr Buffett believed 'BYD has a shot at becoming the world's largest carmaker, primarily by selling electric cars, as well as a leader in the fast-growing solar power industry'. 
Mr Munger, who is the vice-chairman of Berkshire Hathaway, the investment conglomerate controlled by Mr Buffett, made the comments after meeting with BYD chairman Wang Chuanfu and introducing him to Mr Buffett. 
The magazine said Mr Buffett, Mr Munger and David Sokol, the chairman of MidAmerican Energy, regarded the investment in BYD as 'a very big deal indeed'.
But aside from the Buffett effect, the company share price had been supported by its strategic positioning, said Morgan Stanley analyst Jasmine Lu.
'The year-to-date share price resilience was underpinned by the Buffett premium,' Ms Lu said.
'But we believe its dual-mode cars, new battery technology, as well as storage power station are also near-term value drivers'.  
Shenzhen-based BYD, which originally produced mobile phone batteries, first caught the attention of global market watchers after it exhibited models of its battery-operated passenger cars at the Detroit Auto Show last year. 
The company, which now plans to introduce its plug-in electric hybrid cars in the United States by 2011, stole the show in Detroit with the exhibition of its plug-in hybrid mid-sized car model, the F6DM.
'I'm impressed by BYD's hybrid with its modern design and high technology,' said Uwe Achterholt, the global head of automotive products at financial consulting group KPMG Germany. 
'Cheap, hi-tech cars will be the first step for Chinese carmakers to tap into the US market.'
BYD said the F6DM can travel about 100km on a single charging of its battery and almost 435km using the petrol engine, which recharges the battery. The batteries can be quickly charged to 70 per cent of capacity in 10 minutes. 
Mr Wang began his rechargeable battery business in 1995 in Shenzhen. He raised about US$300,000 from relatives, rented about 2,000 square metres of space for production and aimed at competing with imports from Sony and Sanyo.
Within five years, the company had become one of the world's largest manufacturers of mobile  phone batteries by market share. 
Mr Wang entered the vehicle battery  business in 2003 and then progressed to making hybrid cars. In December last year, BYD became the first carmaker to introduce a hybrid - the F3DM - on the mainland. The car is priced at 149,800 yuan (HK$170,172). 
The company is now winning plaudits from analysts around the world. 'Maybe some people still pay too much attention to big state-owned carmakers in China in the belief they are best-placed to excel in the industry,' said an industry player.
'But I tell you, it is only these bold private companies that have flexibility to surprise the industry.'
Driving dreams
The electric car maker caught the attention of Warren Buffett 
The stock has attracted buying and in the past month has risen: 76%



Carmaker BYD savours benefit of Buffett effect