BYD's Hong Kong Shares Surge, Outpacing Mainland Counterparts Amid Record Premium
Shares of BYD Co. Ltd. listed in Hong Kong have reached unprecedented levels, widening the valuation gap with their mainland counterparts to a historic high. This divergence underscores the growing investor confidence in the electric vehicle giant's international expansion and strategic initiatives.
The Hong Kong-listed H-shares of BYD have been trading at a significant premium compared to its Shenzhen-listed A-shares. This premium reflects heightened investor enthusiasm driven by BYD's aggressive global growth strategies and robust financial performance.
In a landmark move, BYD raised approximately $5.6 billion through a share placement in Hong Kong, marking the largest equity follow-on offering in the global automotive sector over the past decade. The company issued 129.8 million H-shares at HK$335.20 each, representing a 7.8% discount to the previous closing price. Despite the discount, the offering attracted substantial interest from institutional investors, including sovereign wealth funds from Europe and the Middle East.
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The proceeds from the share sale are earmarked for research and development, overseas business expansion, and general corporate purposes. BYD's strategic focus includes establishing production facilities in countries such as Brazil, Hungary, and Turkey, aiming to mitigate geopolitical risks and tap into emerging markets.
The company's international ambitions are further evidenced by its recent ventures, including the construction of a $680 million manufacturing plant in Brazil with an annual capacity of 150,000 units. Additionally, BYD has launched new EV models in various markets, including the Seal sedan in India, priced competitively to capture market share.
BYD's financial health remains robust, with a reported revenue of 502.25 billion yuan and a net profit of 25.24 billion yuan in the first three quarters of 2024, reflecting year-on-year growth of 18.94% and 18.12%, respectively. The company's rapid production acceleration is notable, achieving the manufacture of 5 million new-energy vehicles within just 15 months, a feat that previously took nearly 15 years.
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