BYD stock forecast: Will BYD shares recover despite Warren Buffett cutting Berkshire Hathaway's stake?
BYD’s (1211) stock price has slumped by a third in six months as Warren Buffett’s Berkshire Hathaway continues to unwind its position in the Chinese vehicle manufacturer.
The Shenzhen-based company’s stock price has tumbled from HK301.20 in late June this year to HK201.60 as the market closed on 19 December 2022.
BYD (1211) live stock price
Analysts have flagged up the issue of intensifying competition in what is already a fiercely saturated marketplace for new electric vehicles (EV). However, there are hopes BYD can recover lost ground over the coming year with the global expansion of its business and the launch of new passenger brands.
In our BYD stock forecast we look at the performance of the stock price this year, analyse the company’s recent news and ask analysts for their BYD stock predictions.
What is BYD? Facts about the company
BYD’s history can be traced back to 1995 when it began developing rechargeable batteries.
Its growth has been rapid. Over the past 27 years, it’s transformed from a relatively small start-up with 20 employees to a global giant employing more than 230,000 people. Overall, the company now has more than 30 industrial parks across six continents. It’s involved in electronics, automobiles, new energy and rail transit.
BYD has been involved in EVs since 2003. The company has focused attention on research and development, with chief designer Wolfgang Egger leading an international team.
According to Morningstar, the automobile segment contributes about half of company revenue.
This includes manufacturing and selling electric and internal combustion vehicles, primarily passenger vehicles and buses, as well as low-carbon urban rail transportation products.
BYD stock started trading on Hong Kong Stock Exchange on 31 July 2002 at RMB 1.00 a share. Its stock code is 01211. In 2011, the company also listed on Shenzhen Stock Exchange at CNY 18. It’s stock code is 002594.
Berkshire Hathaway unwinds position
BYD stock has been hit by investor Warren Buffett’s Berkshire Hathaway (BKRb) continuing to unwind its position in the company that it’s held since 2008.
It has sold around 16 million H shares in the business across six separate transactions since 24 August 2022, according to SimplyWallSt. The total generated by the sales is around HK3.4bn.
BYD stock performance
Our BYD share price forecast has to consider the recent price movements of the company’s quoted stock, which doesn’t make for great reading.
Year-to-date, the BYD stock price has fallen 24%, down from HK265 at the start of January 2022 to HK201.60 as the market closed on 20 December 2022.
There have been highs and lows along the way. The BYD stock price was trading at HK166.9 in March 2022, reaching highs of HK331.40 in late June.
As far as a longer term BYD stock forecast is concerned, the company’s performance is more impressive. In fact, the price has risen 196% from HK68 to $201.60 over the last five years.
According to Morningstar data, the stock has also achieved trailing returns of 25.69% over the period, according to data to 20 December, 2022.
Profits rise in first half of 2022
The company announced that profit had risen 206.35% to RMB3.6bn ($520m) for the six months to the end of June 2022.
In a statement, it said delivery units of the company’s new energy vehicles “achieved non-stop new highs”, with market share increasing significantly.
“The rapid growth in sales volume has helped the company to scale up and improve its profitability, which partially offset the pressure brought by the inflation of the raw materials,” it stated.
BYD pointed out that the combination of Covid-19 and the Russia-Ukraine conflict “formed an intertwined effect” that led to a “complicated and severe” international situation.
“As a result, the commodity [sic] prices soared, global inflation exceeded consensus expectations, and the world economic growth had a notable slowdown,” it added.
In late November 2022, BYD announced that its three millionth new energy vehicle had rolled off the production lines and unveiled a new passenger car brand.
Wang Chuanfu, BYD’s chairman and president, pledged to continue focusing on “scientific and technological innovation” in the face of ever-changing consumption trends.
“In addition to that, BYD will keep on fulfilling people's pursuit for a better life with leading technologies and diversified products,” he said.
He also announced BYD would build Yangwang, a high-end brand targeting the luxury market that would offer disruptive technologies.
The model launch for this brand is expected during the first quarter of 2023. In addition, BYD will release another new brand next year “to meet the diversified demand” of consumers.
The dynamic electric car market
Sales of electric cars doubled in 2021, according to the International Energy Agency’s global electric vehicle outlook 2022.
It pointed out that nearly 10% of global car sales were electric in 2021, four times the market share in 2019.
“This brought the total number of electric cars on the world’s roads to about 16.5 million, triple the amount in 2018,” it stated.
The success of EVs was attributed to a range of factors, such as public spending on subsidies and incentives for EVs nearly doubling in 2021 to USD $30bn.
China leads the way
The good news for companies such as BYD is the increase in EV sales during 2021 was primarily led by China. In fact, it accounted for half of the growth, according to the IEA’s report. It said:
“More vehicles were sold in China in 2021 (3.3 million) than in the entire world in 2020,” it stated. The first quarter of 2022 showed similar trends, with sales in China more than doubling compared with the first quarter of 2021 (accounting for most of global growth).”
The study also noted that electric cars in China are typically smaller than in other markets.
“This, alongside lower development and manufacturing costs, has contributed to decreasing the price gap with conventional cars,” it added.
BYD stock forecast: How do analysts view BYD?
So, what are the BYD stock predictions of analysts? Vincent Sun, an equity analyst at Morningstar, raised some concerns, although he still liked BYD’s offering in the plug-in hybrid arena.
“We see intensifying price pressure in China's new energy vehicle, or NEV, market, especially in the mass-market and entry-level premium segments,” he said in a BYD stock forecast for 2022.
Much of this is to do with the wider market. “After Tesla’s late October China price cuts, several automakers followed suit, offering direct discounts, insurance rebates, and other incentives,” he explained.
“With such a backdrop, we maintain our preference for Nio for its premium brand positioning and BYD for its strong plug-in hybrid model line-up.”
According to the algorithmic forecasts of Wallet Investor as of 21 December, BYD stock was a “very good long-term investment” that could rise 38% over the coming year to HK278.9.
The site’s BYD stock forecast for 2025, meanwhile, had the price shooting up to HK432.88 by December 2025. This would represent a 115% premium over the HK201.60 closing price on 20 December, 2022.
Note that analysts’ predictions can be wrong and should not be used as a substitute for your own research. Always conduct your own due diligence before trading, looking at the latest news, technical and fundamental analysis, and a wide range of commentary.
Remember, past performance does not guarantee future returns. And never trade more money than you can afford to lose.
FAQs
Is BYD a good stock to buy?
Whether BYD is a good stock for you will depend on your personal circumstances such as risk tolerance, portfolio size and goals, and experience in equity markets. You must carry out your own analysis to decide whether BYD stock is likely to rise further in the future and whether it will face any headwinds. And never invest or trade money you cannot afford to lose.
Will BYD stock go up or down?
No-one knows for sure. It’s crucial to do your own research to form an opinion of BYD stock performance and likelihood of achieving analysts’ targets. You must also remember that markets are volatile and past performance is no indication of future returns.
Should I invest in BYD stock?
Whether BYD stock is a suitable investment for you will depend on your personal research, investing strategy and needs, risk tolerance. You need to perform your own due diligence and decide if the stock meets your needs and appetite for risk. And never invest or trade money you cannot afford to lose. ф