Bloomberg News

BYD Rises in Hong Kong After 2011 Profit Beats Analyst Estimates

February 28, 2012

BYD has risen 52 percent this year in Hong Kong trading. Photographer: Qilai Shen/Bloomberg

BYD has risen 52 percent this year in Hong Kong trading. Photographer: Qilai Shen/Bloomberg

BYD Co. (1211), the Chinese carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), rose the most in a week in Hong Kong trading after its 2011 profit beat analysts’ estimates.

The Shenzhen-based automaker jumped as much as 5.4 percent, the biggest intraday gain since Feb. 22, and traded at HK$25.30 as of 9:46 a.m. The benchmark Hang Seng Index slid 0.2 percent.

BYD’s profit fell 44 percent to 1.4 billion yuan ($223 million) last year because of “fierce” competition and slowing sales of solar-energy products, it said in a preliminary earnings statement to the city’s exchange last night. That compares with the 968 million yuan average of 15 analyst estimates compiled by Bloomberg. The company said on Oct. 28 that full-year profit may drop as much as 65 percent.

“On the surface these result seem positive, but since BYD provided relatively little financial information in its release, it is unclear the degree to which one-time gains impacted the results,” Alexander E. Potter, senior research analyst with Piper Jaffray & Co., said in a report today.

Demand for BYD’s cars slowed last year after the government ended buying incentives. The automaker reported a 25 percent plunge in vehicle sales in 2011 as the popularity of its best- selling F3 sedan model waned amid competition from General Motors Co. (GM) and Volkswagen AG (VOW), whose Buick Excelle and Volkswagen Lavida were the two best-selling models in China, respectively.

BYD has risen 52 percent this year in Hong Kong trading, after plunging 59 percent last year, on speculation its new sport-utility vehicle will boost sales and after its sedan models were included in a preliminary buying list for government vehicles.

Sales of the new S6 model may have reached 16,000 units last month, beating the previous record of 15,000 set in December, Jack Yeung, an analyst at BNP, wrote in a note to clients Feb. 7. The model, which runs on both electric power and gasoline, is ranked among the top three best-selling sport utility vehicles in China, according to Yeung.

The company’s F0, F3, G3 and G6 sedans were part of the 412 models approved for purchase by state agencies this year, according to a proposal disclosed by the Ministry of Industry and Information Technology last week.

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net


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