Buffett-backed BYD falls 6% after Chardan says 'get off '

The company dropped 6 percent, the biggest decline since Oct. 30, to close at HK$64.65.

BYD is overvalued as it's trading at 37 times next year's earnings, a premium to peers, Chardan said. Investors replicating Buffett's strategy have caused the automaker to surge since the billionaire's Berkshire Hathaway Inc. agreed to buy a stake last year.

“It's time to get off this bus,” Chardan said in a note to investors dated Tuesday. “Given that electric vehicles remain years away from gaining meaningful penetration, we would recommend investors take profits.”

Chardan began coverage with a “sell” rating and a 12- month price target of HK$40. That's 42 percent lower than Tuesday's close.

Berkshire's MidAmerican Energy Holdings Co. bought 225 million new shares of BYD for HK$8 apiece in July. The tie-up with Buffett may help boost BYD's profile overseas and also reassure potential customers, Chief Executive Wang Chuanfu said last year. The automaker started selling the F3DM, the world's first mass-produced plug-in hybrid car, in December.

The Chinese company has said it plans to sell shares on the mainland to help fund development of its auto business.

BYD's Wang was named China's richest man by Forbes Magazine earlier this month after Buffett's investment helped increase his estimated personal wealth to US$5.8 billion.

Subscribe to The China Post and save 25%. Click here

SharePrintEmail

Write a Comment

Terms

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos
 Respond to this email