Warren Buffett looks to electric car in BYD stake MarketWatch

13 Июн 2014 | Author: | Комментарии к записи Warren Buffett looks to electric car in BYD stake MarketWatch отключены
BYD e6 Electric Cars

Warren Buffett looks to car in BYD stake

HONG KONG — Warren Buffett’s purchase of a $232 million in China’s BYD Co. represents an unusual for the value investor who professes to companies with simple models.

Based in the southern city of Shenzhen, BYD Co. /quotes/zigman/25819/realtime -0.09% has risen from in a few short years to become the biggest producer of rechargeable for cellular handsets. Another line makes handsets for such as Nokia Corp. /quotes/nls/nok NOK -0.38%. while makes gasoline-powered compact and subcompacts, in addition to automobile

Its most attractive asset, analysts say, and the one believed to garnered the most attention Buffett, is the development of green technologies, including lithium-ion and a related line of hybrid and vehicles.

What’s unusual, especially for with Buffett’s track in investing in the likes of Coca-Cola /quotes/nls/ko KO +0.26% and Gillette, is BYD represents a growth story on as-yet unproven technologies.

The plans to unveil it first cars in China before the end of the and in the U.S. and Europe in 2010. the vehicles, and batteries that power them, have been put into mass The firm is also attempting first by moving into the of notebook batteries, stretching its handset-based experience.

This is a bit unique, said Daniel a research analyst at Merrill in Hong Kong, adding the doesn’t fall within usual value-oriented investment The company has to prove itself; the is facing a few challenges.

BYD was established in 1995 and listed in Kong in 1992. The company has production facilities located in regions around China.

which is 87.4%-held by Berkshire /quotes/zigman/219651/delayed /quotes/nls/brk.a BRK.A /quotes/zigman/583979/delayed /quotes/nls/brk.b BRK.B said on Sept. 27 it would buy 225 shares of BYD, equivalent to a 10% for HK$1.8 billion ($231.6 Berkshire Hathaway is the Omaha run by Buffett, holding stakes in and finance, utilities and energy, retailing and services.

MidAmerican David Sokol cited management and strengths in research and as benefits that made in moving ahead with the Sokol will take a on the board of BYD as a non-executive director.

As discussions relating to global change and environmental respect the technologies being developed by BYD be an integral part of that

What’s emerging could be a growth story. BYD’s vehicles may strike a chord China authorities eager to alternative-fuel platforms to reduce the growing dependence on imported With much of the highway and infrastructure yet to be built, there are fewer legacy costs, as mothballing gasoline stations and to consider.

Also, Chinese upgrading from bicycles and might be more receptive to vehicles than their in the West.

Chinese sales of gasoline-powered vehicles nearly in the half of this year and nearly 24% in the first two months of the to September quarter. Analysts the firm still has an uphill to win over consumers in the rest of the It could be especially tough Japanese powerhouses in electric-vehicle such as Toyota Motor /quotes/zigman/199376/delayed /quotes/nls/tm TM -0.54% .

There is still skepticism in the regarding the safety and reliability of vehicles, especially ones by a new Chinese automobile manufacturer was previously unknown outside the Marco Mak, head of at Hong Kong’s Tai Fook said in a research note

BYD e6 Electric Cars

Mak Buffett’s endorsement is crucial in to alleviate the firm’s reliance on debt to fund research and in its automobile business. The firm face capital expenditure of about 8 billion yuan billion) through the end of next

Having the endorsement of one of the world’s successful investors undoubtedly BYD immediate added capital, and a higher profile, Mak said.

/quotes/zigman/38452/realtime 285 4.59 . -0.08.


Buffett’s purchase was well timed to take of the recent fallout in China Hong Kong-listed shares of up about 65% since the MidAmerican purchase was announced, are still about 30% from their last October.

BYD Electric HK:285 -1.71% the unit makes parts for handsets, has its shares rally about 54% the acquisition, but are down 80% from since listing last

Falling shares price also reflect the company fortunes. Net profit for the first amounted to 596 million yuan, 7% from the year-earlier period. The was related to higher material and a weaker performance among its products, historically the firm’s revenue source, because of the slowdown and weaker power sales.

There also could be in Buffett’s recent acquisitions. investments in BYD were made a week after acquiring Energy Group, whose include three nuclear stations. Berkshire followed move with a $3 billion of preferred shares of General /quotes/zigman/227468/delayed /quotes/nls/ge GE -0.34% .

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