BYD sold more units in October than all 10 of China’s leading new carmakers combined, but its profit performance was less than stellar.
BYD’s sales in October were higher than the combined total of China’s 10 leading new carmakers, and investors’ visions of its prospects propelled its market cap to near RMB 1 trillion.
But BYD’s profit performance has been less than stellar, and this article from the WeChat account tide-biz attempts to provide a complete picture to facilitate investors’ better understanding of the company.
Link to the original article (in Chinese):
Key takeaways:
In October, BYD sold 1.22 times more cars than Xpeng Motors, Nio, Li Auto, WM Motor, Neta, Leap Motor, GAC Aion, Zeekr, the Volkswagen I.D family, and Voyah combined.
Although BYD’s profitability remains weak, the stock price has reached a record high, and new energy vehicle sales have become the capital market’s valuation anchor for car companies. Investors’ huge vision for the future of electric vehicles has even led them to decide to ignore the continued decline in short-term financial performance.
With the surge in new energy vehicle sales, investors expect BYD to reach a profit inflection point, replicating Tesla’s 2020-2021 performance trend.
As the world’s largest-selling new energy vehicle company, BYD’s ultra-high valuation needs to be supported by more solid performance. If the huge sales volume is slow to return to the performance of the rebound, hundreds of times the P/E ratio will be difficult to maintain.
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