The BYD share recovered slightly on Thursday, but remains clearly in the red so far this year. After weak quarterly figures, investors are hoping for growing foreign business.
• BYD shares have been in sharp decline since the beginning of the year
• Analysts remain optimistic despite profit slump
• Hope lies in the growing export business
The BYD share was friendly on today’s trading day and ultimately rose by 1.82 percent to HKD 100.70 in Hong Kong. The Chinese electric car manufacturer is sending a short-term positive signal, but the view of the year as a whole remains sobering: the stock is still 21.7 percent in the red since the beginning of the year. Investors are therefore wondering whether this is just a technical countermovement – or the beginning of a more sustainable trend reversal.
Slump in profits impacted – but expectations were not clearly missed
The latest quarterly report, which was published at the end of April, caused disappointment: BYD’s profit fell by around 55 percent, marking the fourth decline in a row. The main reason is the intense price war in the Chinese home market, where BYD is in an aggressive discount battle with competitors such as Geely and Xiaomi.
Despite this weak development, the market reacted relatively calmly. A crucial point: Overall, the results were in line with analysts’ expectations. Although profits were clearly disappointing, sales even slightly exceeded forecasts. For short-term investors, it was precisely this mix of “weak, but not worse than feared” that was apparently enough to stabilize the stock.
Export business becomes a source of hope for BYD
A key driver for the cautious recovery is the increasing importance of foreign business. While the Chinese market is characterized by tough competition and price pressure, international expansion is developing into an important strategic counterpoint.
According to industry information, around 45 percent of the more than 700,000 vehicles sold in the first quarter were exports. BYD itself is optimistic and is sticking to its goal of selling around 1.5 million vehicles outside of China by 2026.
More stable margins can generally be achieved abroad than in the highly competitive domestic market. Regions such as Europe, the Middle East and parts of Asia offer BYD better pricing structures and therefore potentially higher profitability. It is precisely this shift in the business model that is currently being viewed increasingly positively by the market. If BYD succeeds in further expanding its export share, this could stabilize its earnings base in the long term – even if price pressure in China continues.
BYD stock between short-term pressure and long-term fantasy
Current developments clearly show that the market is beginning to differentiate more clearly between short-term pressures and long-term growth drivers. While the drop in profits is significant, it is not an isolated event. Rather, it reflects the structural challenges of the entire Electric carindustry.
Global competition remains intense. Both international providers such as Tesla and Chinese competitors are increasing the pressure. At the same time, the ongoing price war is causing domestic margins to fall. This combination puts strain on the entire industry and calls into question the current growth model.
Nevertheless, analyst sentiment remains predominantly positive. The majority of market observers continue to see potential in the share and point to BYD’s strong market position in the areas of electromobility and battery technology. Even if short-term setbacks cannot be ruled out, the long-term growth potential through international expansion is still considered intact. According to TipRanks, 14 out of 15 analysts recommend buying BYD shares, while only one expert recommends selling. The average price target is HKD 128.2, approximately 27.31 percent higher than the recent closing price of HKD 100.7.
For investors, the share remains a classic balancing act: short-term volatility meets long-term growth opportunities. Whether the current recovery becomes a sustainable upward trend will largely depend on how quickly BYD can continue to advance its international expansion – and whether it manages to noticeably improve profitability outside of China.
Bettina Schneider, editorial team at finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
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