Chinese automaker BYD surged after reporting over 200% jump in first-half net profit

 

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Chinese automaker BYD Company surged more than 5% to close at HK$237.8 in Hong Kong and its Shenzhen-traded shares jumped 4.75% to close at 246.71 yuan.

BYD reported a net profit attributable to shareholders of 10.95 billion yuan in the first half of the year, surging 204.68% from a year earlier. Revenue reached 260 billion yuan, surging 72.72% from a year ago.

The strong performance was mainly driven by rapid growth in the new energy vehicle business, the company said .

BYD’s share in China’s domestic new energy vehicle market expanded further to 33.5% in the first half, further consolidating the leading position in China’s NEV industry, it said.

“If you look at BYD numbers, clearly the top line growth has been very strong, but we are even more impressed by its margins. BYD’s gross margin in the first half was 18%. That’s Tesla’s gross margin,” according to Jiong Shao, Barclays’ China technology analyst.

China’s top-selling car brand posted its best-ever quarterly sales results. Sales of passenger new energy vehicles in the second quarter were 700,244 units, up about 98% year-on-year, according to the company.

BOCOM International maintains a Buy rating for BYD’s H-shares, with a target price of HK$309.67. 

The bank said that competition in China’s NEV market is expected to intensify further, likely to lead to more price war, but the bank remains optimistic about BYD’s sales in the fourth quarter, believing its advantage in supply chain and high-end brands will help the company maintain a good gross profit margin, while exports will continue to be a major driver for the second half of 2023 and 2024.