BYD's net profit in the third quarter was 11.34 million, down 99% year-on-year

BYD Company <01211.HK> announced its first three quarter results this morning. The data showed that BYD's net profit in the first three quarters was RMB 2.433 billion (RMB, the same below), an increase of 4.02% over RMB 2.38 billion in the same period of 2009. Earnings 1.07 yuan.

NetEase’s semi-annual report comparing with BYD’s semi-annual report shows that BYD's net profit in the third quarter was only 11.34 million yuan, compared with 1.16 billion yuan in the same period last year, which means that BYD’s net profit in the third quarter was only equivalent to 1 in the same period of last year. %, and by the rate of decline it has reached 99%.

From the 1.704 billion yuan in the first quarter to 717 million yuan in the second quarter, and to 11.34 million yuan in the third quarter, with the decline in car sales, BYD's profitability has also suffered from Waterloo, with data of 11.34 million yuan. Far worse than JPMorgan's estimated net profit fell 55% to 522 million yuan.

Table: BYD's performance data for the first three quarters of this year

The investors of BYD's investor relations department said it was inconvenient to comment on the three quarterly news report. Its press spokesman Wang Jianjun has been on the phone for no answer. Previously, Wang Jianjun and Public Relations Manager Xu Anjun told NetEase that the sales volume in the fourth quarter is expected to improve. The company had previously lowered its sales target to 600,000 units. It is believed that this year will still have a chance to complete and will not continue to decrease.

Guotai Junan (Hong Kong) automotive industry analyst Chen Huanyu told NetEase that BYD's third-quarter results were far behind market expectations, mainly due to the decline in auto business, and its battery and mobile phone business remained relatively stable.

Chen Huanyu pointed out that BYD's overall sales were inferior to its peers, and price reductions led to a drop in gross profit. At the same time, the acquisition of an 18% stake in the lithium mines of Tibet Mining, the decline in government subsidies, and the investment in R&D in the household appliance industry also contributed to the increase in costs. The overall profit.

Poor performance in automotive business leads to significant decline in performance

According to the semi-annual report and the financial report data of the first three quarters, it can also be calculated that the sales revenue of BYD in the third quarter was 10.256 billion yuan, which was the same as the 10.228 billion yuan in the same period of last year. This was a situation in which domestic automobile enterprises increased significantly compared with the same period last year. BYD’s The flat data shows that the company’s revenue growth rate has lagged behind its peers.

According to the ring comparison data, the company's second quarter sales revenue was 11.59 billion yuan, and the quarterly decline rate in the third quarter also reached 11.5%.

According to Chen Huanyu, BYD's battery and mobile phone business has been developing steadily. The poor performance of the three quarterly reports was mainly affected by the automotive business. At present, the automotive business is BYD's largest business, accounting for more than half of BYD's turnover.

According to data previously obtained by NetEase Finance, BYD's sales volume has continued to decline after April this year, with sales of 31,069 units in August, setting a new low for the company's sales during the year. As sales volume continues to decline, BYD announced on August 3 that it will adjust its annual sales target of 800,000 vehicles set at the beginning of the year to 600,000.

Data from the research report shows that BYD’s cumulative sales growth from January to September was only 32.7%, which is lower than the industry average of 39%. From a single month’s point of view, the company’s sales growth rate has been below the industry average for four months in a row – from June to September, especially the decline of around 20% in BYD in August and September and around 20% in the entire market. The growth is in stark contrast.

According to industry sources, BYD's poor sales may be related to the continuous news of distributors retreating from the network this year. According to media reports, at the end of July, some BYD dealers in Hunan had already switched to rival Geely Automobile. Earlier, Chengdu Pingtong, the gold dealer of BYD in Chengdu, also announced that it would withdraw from the network.

Table: BYD Auto Sales Data Sheet for 2010

Car sales continue to decline 600,000 goals difficult to achieve

Although BYD's September sales increased by 6.5% to 33,085 units, and the cumulative sales in the previous September reached 386,200 units, the target of 600,000 units in the first three quarters after the sales volume was lowered was still only 64.4%. The completion rate was Top 10 auto companies.

The relevant person in charge of BYD repeatedly stressed that the company is confident to complete the goal of 600,000 vehicles. However, from the current perspective, BYD needs to sell more than 70,000 vehicles per month in the fourth quarter to complete its mission, and its historical sales never exceeded 7 in a single month. 10,000 cars.

Chen Huanyu expects that BYD will have difficulty in completing sales of 600,000 vehicles this year. The foundation for the fourth quarter of last year was relatively high. Under the circumstances of poor sales, the company's negative performance in the fourth quarter of this year is more likely to occur. In addition, the investigation of Xi’an No. 2 Plant may continue to affect sales volume next year, and it is not easy for BYD’s car sales to achieve a 15% increase next year.

Taifook Securities also pointed out that BYD has little chance of selling an average of 71,000 vehicles in the next three months. Therefore, the company’s 2010 sales target for automobiles was further reduced from 600,000 vehicles to 500,000.

Taifook Securities lowered BYD's rating from holding to sell, with a target price of HK$45.50, which is equivalent to 15 times of 2011's estimated P/E, which is more than the average valuation of the auto industry plus a reasonable premium. Guotai Junan (Hong Kong) Chen Huanyu also stated that BYD’s reasonable target price is around HK$45-46.

Currently, Buffett’s Berkshire Hathaway currently holds a 10% stake in BYD. At the end of September, Buffett said he would not reduce BYD shares.