On the evening of August 29, BYD released its first half of 2022 performance report. According to the H-share announcement report, BYD achieved revenue of 150.607 billion yuan in the first half of 2022, a year-on-year increase of 65.71%;

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2025-04-15

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On the evening of August 29, BYD released its first half of 2022 performance report. According to the H-share announcement report, BYD achieved revenue of 150.607 billion yuan (RMB) in the first half of 2022, a year-on-year increase of 65.71%; gross profit of 20.341 billion yuan, a year-on-year increase of 75.35%... Simply put, has exceeded 800 million yuan in the past six months. Such sales data not only creates the most eye-catching financial report data in BYD's history, but also makes BYD the most profitable car company in China without any suspense.

However, on August 30, Buffett announced that it had completed the reduction of its holdings of BYD H shares by 1.33 million shares, cashing out nearly HK$370 million. Buffett's move not only caused BYD's stock price to fall by nearly 8%, but also caused all stocks in the new energy sector of A shares. On September 3, Buffett once again announced that he had reduced his holdings of BYD H shares by 1.716 million shares, cashing out about HK$450 million. The question is, why did Buffett reduce his holdings one after another when BYD announced its most eye-catching financial report? Did Mr. Ba start to look down on BYD, or even China's new energy vehicle market?
How impressive is BYD’s 2022 half-year performance report?
On the evening of August 29, 2022, BYD released its first half of 2022 performance report. According to the H-share announcement report, BYD achieved revenue of 150.607 billion yuan (RMB, the same below), a year-on-year increase of 65.71%; gross profit of 20.341 billion yuan, a year-on-year increase of 75.35%; net profit attributable to shareholders was 3.595 billion yuan, a year-on-year increase of 206.35%; net profit attributable to shareholders after deducting non-operating items was 3.029 billion yuan, a year-on-year increase of 721.72%; earnings per share was 1.24 yuan, a year-on-year increase of 202.44%; net cash flow attributable to shareholders was 43.185 billion yuan, a year-on-year increase of 346.27%. After the financial report was announced, BYD rose more than 2% on August 30, reaching HK$269.8. More than securities institutions gave BYD a "buy" rating .

As we all know, the industry environment in the first half of 2022 has not improved. In the first half of 2022, the COVID-19 pandemic, the conflict between Russia and Ukraine, and the complex international forms caused the price of commodity soaring, and the global inflation . Coupled with the impact of the epidemic at home and abroad, especially the domestic epidemic recurred at multiple points in the first half of the year, resulting in sharp tensions in the industrial chain and supply chain, shrinking domestic demand and impact on supply. This is especially true for the automotive industry. Since March this year, the epidemic in Shanghai and Jilin in China has restricted consumers from entering stores. In addition, the automotive industry has a shortage of chips and rising raw material prices have become a "stubborn disease" and it is difficult to eliminate in a short period of time. In such a "harsh" environment, BYD's net profit attributable to shareholders in the first half of 2022 alone was 3.595 billion yuan, which exceeded the net profit attributable to shareholders in the whole year of 2021.

According to China Automobile Manufacturers Association data, in the first half of 2022, BYD's new energy vehicles' market share reached 24.7%, an increase of more than 7.5 percentage points from 2021. According to data from the China Passenger Car Association, in the first half of 2022, BYD occupied six seats in the top ten domestic new energy passenger car sales rankings. In addition, in terms of sales data, according to statistics from January to July 2022, BYD sold 792,700 new energy vehicles, accounting for 29% of the market share. In comparison, Tesla sold 206,000 vehicles, accounting for 7.5% of . The rapid growth of

business has long been reflected in the stock price. In June this year, BYD's market value exceeded one trillion yuan. Although it has fallen back to more than 800 billion yuan, it is still the most valuable listed company in China. The market value of even exceeds the total market value of the four A-share auto companies, SAIC, GAC, Great Wall, , Changan , .

In addition to the automotive business, BYD also has mobile phone business. BYD's mobile phone parts and assembly business is mainly aimed at domestic mobile phone users, including Huawei , OPPO, vivo, Xiaomi , etc., as well as Apple peripheral smart hardware products except mobile phones. Compared with the new high in the automotive business, BYD's mobile phone business is at its lowest point in history. The gross profit margin of mobile phone parts and assembly businesses has fallen to the historical lowest point of 6.08% of annual and interim reports since 2013, further down from 7% and 7.57% in mid- and full year 2021. The weak demand for high-end Android phones is a dilemma faced by all domestic mobile phone manufacturers. This is also the main reason why BYD's mobile phone business has declined to a trough.

Why did Buffett reduce his holdings in BYD?

· Is Buffett short of cash?

According to relevant information disclosed by the Hong Kong Stock Exchange on August 30, Buffett's Berkshire Hathaway sold 1.33 million shares of BYD H shares at an average reduction price of HK$277.10 per share on August 24, cashing out nearly HK$370 million. On September 2, the latest information from the Hong Kong Stock Exchange disclosed Yi, Buffett's Berkshire Hathaway, another 1.716 million shares of BYD shares, with an average selling price of HK$262.72 per share, cashing out about HK$451 million. So far, through these two rounds of share reduction, Buffett cashed out a total of more than HK$800 million.

Some people say that the reason why Buffett reduced his holdings in BYD was because he was short of money, so he reluctantly sold his shares in BYD. It can be seen that Berkshire Hathaway holds a total of more than US$7 billion in shares in BYD, and the total amount of these two rounds of cash out is about US$100 million, which is a very small number for Berkshire , with a market value of more than US$630 billion. As of the second quarter, the company's cash on the books was about US$472 billion. Therefore, Buffett did not reduce his holdings in BYD because of lack of cash.

Why did Buffett reduce his holdings in BYD?

· Buffett bears BYD?

Buffett once praised BYD founder Wang Chuanfu . At the 2009 Buffett shareholders' meeting , Buffett called Wang Chuanfu a "real star". "BYD is the right choice for me." Buffett once commented on Wang Chuanfu: "There are many great ideas, and he is very good at turning these ideas into reality." Buffett's close friend - Munger is even more optimistic about BYD and Wang Chuanfu. In Munger's eyes, Wang Chuanfu is a "combination of Edison and Bill Gates", which can not only solve technical problems, but also effectively manage the company. It was also under the recommendation of Munger that Berkshire Hathaway, under Buffett's name, bought 225 million BYD Hong Kong stock shares at a price of HK$8 per share in 2008, becoming BYD's fourth largest shareholder.

Today, these praises are in a strong contrast with Berkshire Hathaway's continuous share reduction. However, reducing holdings in BYD H shares does not mean that Buffett denies BYD's fundamentals, but is more of a market-oriented short-term trading behavior. After all, reducing positions when there is good news and increasing positions when there is bad news. This is the usual way for investors. BYD has just released its strongest financial report in history. When the stock market is in full swing, it is a correct choice for Buffett, who holds 200 million BYD shares. However, this does not mean that Buffett will no longer invest in BYD after the decline, nor can it be ruled out that Buffett will use the reduction of holdings to suppress BYD's stock price, and wait for the stock price to fall back and buy more and cheaper shares.

The two consecutive reductions in BYD show that Buffett’s plan to reduce holdings is likely to have not been completed. It is not ruled out that there will be another next time. Will Buffett clear his position with one click on BYD? "One-click clearance" is definitely a good medicine for retail investors to cut off the pain of trapping, but "one-click clearance" is impossible for shareholders like Buffett to accomplish. After two rounds of share reduction, Buffett still holds BYD stocks with a market value of more than HK$50 billion. Currently, the daily transaction volume of BYD Hong Kong stocks is basically maintained at around HK$3 billion. It is not easy for Buffett to sell all BYD stocks through "one-click clearance". Even if he wants to sell, there are not so many people to take over. Therefore, Buffett can only gradually arbitrage without causing large fluctuations in the stock price.

Federal interest rate hike caused the dollar index to soar, thus allowing overseas assets to further flow back to the United States, which is also one of the reasons why Buffett reduced his holdings. In addition, Buffett's financial data this year is poor, and reducing his holdings in BYD stocks to achieve profitability can more or less hedge losses caused by investment in other assets.

Buffett's investment in BYD Interesting News

· For the first time investing in Chinese private enterprises

In Buffett's investment career, technology stock has always been extremely rejected by him.However, unexpectedly, he actually bought 225 million BYD H shares under the financial crisis in 2008, accounting for about 10% of BYD's shares after the allotment at that time, with a total transaction amount of approximately HK$1.8 billion. This is the first time that Buffett has made long-term strategic investments in Chinese private enterprises, which has also made Buffett the largest overseas shareholder of BYD. You should know that BYD in 2008 is not today's new energy leader, nor does it have the unique DM-i technology, and its main model is just a cheap fuel car that counterfeits Toyota Crown - F3.

I don’t know what kind of perspective Buffett liked BYD at that time, but only knows that his close friend Munger played a big role in it. Munger once commented on BYD founder Wang Chuanfu: "He is simply a mixture of Edison and Welch; he can solve technical problems like Edison, and at the same time solve corporate management problems like Welch."

· Wang Chuanfu drank electrolyte

Under Munger's strong praise, Sokol, president of Buffett's Sino-US energy company, visited BYD's Shenzhen headquarters in July 2008. It is reported that Wang Chuanfu took Sokol to visit the BYD factory at that time. When it was introduced that the battery of the factory used recyclable materials, Wang Chuanfu immediately poured a cup of electrolyte and drank it all in front of Sokol, proving that the electrolyte of the battery was non-toxic and recyclable. When Sokol returned to the United States, he said straight to Buffett: "This guy is charming, you must meet him; when talking about Wang Chuanfu drinking electrolyte, he also emphasized 'no joke'."

· Wang Chuanfu actually refused the investment of the stock god

Buffett originally wanted to invest 500 million US dollars, but after Wang Chuanfu evaluated the investment plan, he believed that the proportion of equity sold in this investment was too large and was not consistent with the company's own investment and development plan, so he refused Buffett. Investment rejection is definitely the first time in Buffett's decades of investment, but Buffett was surprised and also felt lucky. At least Wang Chuanfu did not want to sell his company, which is a good sign in itself. After further negotiations, Buffett agreed to reduce the investment amount to US$230 million.

In February 2018, Buffett mentioned the four CEOs he admired the most, among which Wang Chuanfu was listed. The other three CEOs are: Bezos , precision parts Mark Donegan and Apple Cook . On April 14, 2020, Buffett posted a photo of wearing a mask produced by BYD online. The T-shirt that Buffett wore reads: "I want to live a hundred years old. So far, everything is fine." Buffett also wrote under the photo: "And now, my BYD mask is helping me achieve my goal! Thank you!"

Buffett's value investment and BYD's surge have become a story in the capital market, and BYD has also become a hot investment target. In sharp contrast, Buffett has never been optimistic about Tesla. He once told the media: "Musk is very amazing. Tesla is a great company, but it is not an ideal investment target."

Full text summary: The stock market speculates about the future, and the speculates about expectations. BYD's production and sales volume in the first half of this year was 640,000 vehicles, and if nothing unexpected happens, the total sales volume for the whole year will exceed 1 million vehicles. However, it is very difficult for BYD to continue to maintain such a high growth rate this year next year based on its annual sales of over one million. You should know that the "No. 1 sales leader" of domestic auto companies - FAW-Volkswagen The total sales of last year were only above 1.8 million vehicles. Buffett must have had such predictions, so he took the lead in reducing his position. Buffett's reduction in holdings in BYD does not mean that he is "shouldering BYD". "shouldering new energy" is even more nonsense. After all, the goal of carbon neutrality with has not been achieved. Before truly surpassing Tesla, BYD still has a long way to go, and BYD's market value will hit new highs with the continuous development of its new energy business.

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