I've got a lot of attention before a few days U.S. electric vehicles (EV) sensation Tesla (NASDAQ: TSLA), so it's only fair that I by writing about China's home-made EV superstar BYD-up follow-up (OTC: BYDDF;) HKEx: 1211; Shenzhen: 002594), which recently published quarterly figures, which look quite disappointing. The only things that look like something encouraging in this latest report are the fact that billionaire investor he bought that in 2008 its 10-percent stake in the company to keep Warren Buffett, still, and that BYD is lucrative. But also the gains strong support from Beijing in its programme to promote clean-energy vehicle development.
If I had to describe BYDs recent performances in a single thought, I'd say that pretty good pilot programs set up this company for its EVs but has found it difficult to translate these programs in large companies. In the last three years, BYD has announced a steady sequence of such pilot programs in a variety of markets, from Western Europe, the United States and Latin America, as well as in its home market of China. But with a few rare exceptions, we need to have one of these programs turn you into the major orders that BYD has its EV program long term profitable to make.
Everything, what say we take a closer look of BYDs latest quarterly results, to show its profit largely evaporated in the first three months of the year. The company reported a first quarter net profit of around 12 million Yuan, or just over $2 million, which was 90 per cent compared to the previous year. This is quite a small figure for a company whose Umsatz amounted to nearly 12 billion yuan for the quarter was down a more modest 9 percent.
BYD reported by 98 million Yuan it received Government grants in the quarter which means that it would have almost certainly lost money, without this support. Of course not we can subtract that amount from its total profit directly, but I think it is fair to say that the company help would have reported a loss of 50 million Yuan or more without this Government.
BYD's Hong Kong traded shares fell 2.8 percent before the report came, although some the reason the latest trading session got back on Friday. The stock has over the last year and a half, more than tripling since October 2012 on enthusiasm about the EV program actually collected anything. But I suspect that this latest disappointing result could force investors to recognize the company's electric dreams materialize are not, as hoped, and could a mark the beginning of wider selloff, the stock drop by a third or more in the next few months could see.
BYD is in the difficult position of waiting on the EV business to launch, fruits as its older battery and traditional gas-powered car companies show signs of aging. BYD earlier said it will leave the gas powered car business altogether by 2015 as the future in electric vehicles. The company also announced a major plan a year ago, to raise up to $500 million by issuing new shares in a bid to shore up its cash position.
I mostly excited about BYD everytime wrote it a new EV pilot, as such programs announced, to test the technology before larger orders are a necessary first step for customers. But the fact that we some large orders appropriate means until probably three years later on, that many of these pilot programs were not as smooth as BYD had hoped and maybe the buyer doesn't see how the technology. The not sure bode well for the future of the company, which means that BYD Government support its bottom line for the rest of this year and possibly in 2015 could depend on.
Bottom line: BYD's latest results show his EV sales are not accelerated, as fast as planned and it will support its bottom line depending on Government subsidies for the rest of this year.
This blog was originally released on young's China business blog and was published with permission.
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