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Shares of Chinese automaker BYD Company stage a strong rally on stronger-than-expected first-half earnings. Its Shenzhen-listed shares surged more than 7% to 346 yuan per share and Hong Kong-listed shares jumped nearly 5% to HK$296.8 in the morning session on Friday.
BYD said its first-half net profits attributable to parent is expected to surge by 138.6% – 206.8% year over year to 2. 8 -3.6 billion yuan, which would be largely in line with its full-year profit of 3.05 billion yuan in 2021. That means BYD’s Q2 profit would be between 1.99 billion yuan and 2.79 billion yuan, stronger than market expectations.
BYD Company told investors that the company would have to hike its product prices to cope with the surging raw material prices in the second half of the year, but it may unleash more profits in the future after the upstream raw material prices ebb back.
After BYD released the data, Goldman Sachs added the carmaker’s Hong Kong-traded shares into its Conviction Buy List, with a target price of HK$405, implying 43% upside from the closing price of Hk$283 on Thursday.
BYD has been adjusting product structure, put more focus on higher-priced products and the company managed to maintain its profit margin steady despite rising battery costs, said the bank, adding that BYD’s profitability is likely to pick up in the second half of the year.
In addition, Credit Suisse hikes BYD’s stock price target to HK$380, with Outperforming rating.
