BYD Co fell the most in a month in Hong Kong trading after the Chinese carmaker partly owned by Warren Buffettâ€™s Berkshire Hathaway Inc. (BRK/A) forecast first-half profit may slump as much as 95 percent.
BYD sank as much as 6.1 percent to HK$19.82, the biggest intraday dip since March 26, before trading at HK$19.90 as of 3:13 p.m. in Hong Kong. The companyâ€™s Shenzhen-traded shares retreated as much as 3.8 percent to 26.36 yuan, the lowest level since March 28.
Net income for the six months ended June 30 may drop to between 13.8 million yuan ($2.2 million) and 68.8 million yuan because of reduced earnings from solar energy and mobile handsets, the Shenzhen-based manufacturer said in a statement to the Hong Kong stock exchange yesterday. Demand for BYDâ€™s cars also slowed after the government ended buying incentives and the popularity of its top-selling F3 sedan waned.
â€œThe whole solar industry has a tremendous amount of excess capacity,â€ said Theodore Oâ€™Neill, an analyst at Wunderlich Securities in New York. â€œIf youâ€™re in an industry thatâ€™s borderline profitless and youâ€™re a smaller player like BYD, itâ€™s maybe going to be worse than profitless.â€
First-quarter vehicle sales fell 8 percent from a year earlier to 108,755 vehicles, the company said. Chinaâ€™s total passenger-car sales slipped for the first time since 2005, dropping 1.3 percent from a year earlier, as the slowing economy and rising fuel costs curbed buying. BYD blamed the forecast decline in profit mainly on a â€œgreat lossâ€ in its solar cell business.