Shares of Chinese electric-vehicle giant BYD fell nearly 5% in Hong Kong on Monday, following the release of its interim results on Friday [1]. BYD reported a second-quarter net profit of 8.2 billion yuan ($1.2 billion), representing a 30% increase from a year earlier, while revenue for the quarter fell 3% year on year to 194.6 billion yuan, according to Citi [1]. For the first half of the year, BYD's revenue declined 7.1% year on year to 344.8 billion yuan, and net profit attributable to shareholders dropped 20.5% to 12.3 billion yuan [1].
BYD attributed the decline in profitability to 'sluggish domestic demand and robust export growth' in China's auto industry, as well as fierce competition and rising costs for commodities, raw materials, and chips, which squeezed automakers' profit margins [1]. Despite these challenges, BYD's exports surged 67.8% year on year to 792,000 vehicles in the first half [1]. In China, combined sales of BYD's brands such as FANGCHENGBAO, Denza, and Yangwang grew 61% year on year, accounting for 12.8% of the group's passenger vehicle sales [1].
Citi provided a forward-looking outlook, expecting BYD's third-quarter core earnings to reach 13.5 billion yuan and projecting full-year net profit of 41.2 billion yuan, which could be 8% above consensus estimates [1].
CONCLUSION
BYD's first-half results reflect the impact of intense competition and rising costs in China's EV market, leading to a notable decline in profitability and a sharp share price drop. However, strong export growth and positive analyst forecasts suggest potential for recovery in the coming quarters.