Tags: Berkshire | Buffett | BYD | china

CLSA Slashes Price Target on Buffett-Backed BYD

Tuesday, 25 Sep 2012 03:34 PM

BYD Co., the Chinese carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., had its price target cut by 94 percent at CLSA Asia Pacific Markets, on a worsening outlook for its products.

CLSA lowered its 12-month price estimate for the Hong Kong- traded shares to HK$0.41, from a previous estimate of HK$7.40 set in February. The new target is 97 percent below BYD’s closing price on Tuesday in Hong Kong. BYD’s American depositary receipts sank for a fourth day in over-the-counter trading, losing 4.3 percent to $3.75 by 1:37 p.m. in New York .

BYD, based in Shenzhen in southern China, reported a 94 percent plunge in profit for the first half of this year to 16.3 million yuan ($2.6 million) on Aug. 27. Net income for the first nine months is expected to fall by as much as 95 percent, the company said. MidAmerican Energy Holdings Co., a unit of Buffett’s Berkshire Hathaway, bought 9.9 percent of BYD in September 2008 to tap rising demand for clean technology.

“The company will likely deteriorate further due to declining business in mobile phone components, rechargeable batteries and new energy,” Scott Laprise, a Beijing-based analyst at CLSA, wrote in a research note today. “We see few positive catalysts going forward and maintain our conviction” to sell the stock, Laprise wrote.

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