In major news on Hong Kong stocks, BYD Co. Limited (HK:1211) released its annual report for 2023, revealing sluggish profit growth in Q4, despite achieving solid revenue. This was mainly triggered by the pressure on EV (electric vehicle) sales amid intense price competition and macro pressures in China. Hong Kong-listed shares of BYD were trading down by over 4% as of writing.
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In the fourth quarter, BYD reported a net profit of ¥8.67 billion, marking an 18.6% increase compared to the previous year but a 16.7% decrease from the third quarter. However, the company reported record revenue of ¥180 billion in Q4 2023, marking a 15.14% increase year-over-year and a 33.56% rise from the previous quarter.
Based in China, BYD Co. stands as one of the leading global manufacturers of EVs (electric vehicles).
BYD’s Resilient Full-Year Performance
While BYD’s fourth-quarter performance indicated pressure on its profitability, the company’s full-year performance reflected resilience. For the full year, the company achieved a net profit of ¥30.04 billion, representing an 80.7% surge from 2022 and setting a new record high. Revenue increased by 42% to ¥602.3 billion compared to the previous year.
Additionally, the company reached another milestone by selling approximately 3.02 million units, meeting its annual target for 2023. BYD’s vehicle deliveries in 2023 increased by 62% compared to the last year.
The Battle of EV Price Tags
BYD surpassed Tesla (NASDAQ:TSLA) as the leading EV seller in the fourth quarter of 2023. In comparison to BYD’s sales of over 3 million units, Tesla sold 1.82 million EVs globally in 2023. BYD’s strong presence in the EV market stems from its aggressive price reductions. While Tesla also lowered prices over the year, it couldn’t keep pace with BYD’s pricing strategy, resulting in BYD quickly gaining the upper hand.
According to Reuters calculations, BYD reduced the prices by an average of 17% for 13 of its car models, which accounted for over 90% of its total sales in China in 2023.
On the flip side, analysts are wary that such aggressive price cuts could potentially affect margins down the line.
Is BYD Stock a Good Buy?
According to TipRanks, 1211 stock has received a Strong Buy consensus rating, backed by three Buy recommendations. The BYD Co. share price target is HK$296.68, which implies an upside of 41% from the current trading level.
