BYD Co. (1211), the Chinese automaker that counts Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) as an investor, slumped the most since August 2011 in Hong Kong trading after predicting the smallest quarterly profit in a year.
BYD plummeted 12 percent to close at HK$28.45 in Hong Kong, the biggest decline since Aug. 23, 2011, cutting its gain this year to 22 percent. The benchmark Hang Seng Index rose 0.65 percent.
Net income for the three months through September may be 3 million yuan ($490,000) to 50 million yuan, according to Bloomberg calculations using BYD’s reported data. The Shenzhen, China-based company, which also makes batteries, mobile phones and solar panels, said earnings will be hurt by weaker vehicle sales and handset orders.
“The earnings-recovery path looks bumpy,” Ole Hui, a Hong Kong-based analyst at Mizuho Securities Asia, said of BYD in a note to clients today. “With the weak third quarter guidance, we expect a delay in recovery.”
At the low end of the forecast range, BYD’s profit would be its smallest since a loss in the second quarter last year, according to data compiled by Bloomberg. Quarterly earnings were derived by subtracting the company’s six-month figures from its nine-month projection.
“The automotive industry is in its weak season in the third quarter,” BYD said in a statement to the Shenzhen stock exchange. Profitability at BYD’s smartphone business is under pressure because of increasing competition in the industry, and solar losses remain a drag on results even though they’re narrowing, the company said.
BYD, whose market value has more than doubled in the past 12 months, said yesterday its first-half profit surged 26-fold to 427 million yuan amid rising auto sales, strong orders for its mobile-phone handset business and a narrower loss at its photovoltaic business.
The carmaker’s Shenzhen-traded stock fell 2.4 percent to 35.10 yuan and has climbed 72 percent this year.
The company plans to increase overseas sales of its electric buses as it completes a three-year restructuring. Founder Wang Chuanfu said BYD will remain in the solar-panel, battery and auto businesses as part of the company’s vision to create a “zero-carbon and zero-emission eco-environmental system.”
MidAmerican Energy Holdings Co., a unit of Buffett’s Berkshire Hathaway, took a 9.9 percent stake in BYD in 2009, paying HK$8 apiece for 225 million new shares.
To contact Bloomberg News staff for this story: Alexandra Ho in Shanghai at email@example.com