BYD returns to A shares "healing"

As the only auto company favored by Warren Buffett in China, BYD brewed a three-year plan to return to A shares and finally got its wish. The CSRC issued an announcement last week and BYD’s initial application was approved. However, after experiencing declining performance, withdrawing from the Internet, lawsuits, and even the "stock god" halo also gradually receded BYD, at this moment choose to return to A shares, seemingly waiting for three years to achieve a positive result, but in fact it is an opportunity to scratch the bone.

The issuance scale shrinks 20% According to the prospectus, BYD will issue no more than 79 million A shares, and plans to raise funds to invest 2.192 billion yuan to continue to enhance the core competitiveness of its three major business segments: battery, IT, and automotive.

The proceeds from the return of BYD shares to A shares will be used for 3 projects. Including Shenzhen BYD Lithium Battery Co., Ltd. lithium-ion battery production project 400 million yuan, Shenzhen Automobile R & D and production base project 1.140 billion yuan, BYD Automobile Co., Ltd. expanded its variety and auto parts construction projects 652 million yuan. Among them, more than 80% of the funds raised were used for automotive business.

It is worth noting that the difference between BYD's A-share IPO and its 2009 "return" plan is obvious. At that time, the company plans to issue no more than 100 million A shares, raising 2.85 billion yuan. The issue size has shrunk by 20% compared with the original plan.

Industry experts stated that the change in the plan was mainly due to the substantial decline in BYD's performance. From 2008 to 2010, BYD's net profit attributable to the shareholders of the parent company was 1.021 billion yuan, 3.794 billion yuan and 2.523 billion yuan respectively. Last year, net profit decreased by 1.27 billion yuan, a decrease of 33.48%. At the same time, the overall gross profit margin of the company's business fell from 21.79% in 2009 to 17.78%.

In addition to the declining performance, the negative influence of the withdrawal from the network, lawsuits and other negative effects, let BYD gradually retreat to the "shares of God" halo. Its H share price fell from 88 Hong Kong dollars all the way to 27 Hong Kong dollars.

Bitter and other national policies support BYD's return to A-shares is a tortuous process. In 2008, BYD had a plan to return to A shares. Eventually, it was miscarried due to poor market performance. In July 2009, BYD announced that the board of directors passed back to A shares and related materials were subsequently submitted to the China Securities Regulatory Commission for approval; July 2010 , BYD again delayed the A-shares issuance plan and extended the validity of the A-share plan resolution by one year.

"BYD is eager to return to A-shares, mainly to ease the financial pressure and develop new energy projects." Industry experts said. However, the soon-to-be-released "New Energy Vehicle Development Plan" has brought BYD a chance to survive, and it also makes BYD's plan to return to A-shares the most appropriate opportunity.

The relevant person of BYD said that BYD’s return to A-shares hopes that more investors can share the achievements of the company’s rapid development, and at the same time leveraging the support of domestic investors, it will make BYD’s new energy industry bigger and stronger.