BYD eyes bond sale to relieve fund woes
By Jin Jing |
August 27, 2011, Saturday
|
Print Edition
Print Edition
CAR and battery producer BYD Co yesterday announced it would raise as much as 6 billion yuan (US$939 million) through a bond sale to ease capital demand after first-half profit fell 89 percent.
BYD's board of directors agreed that the corporate bond will have a term of maturity not exceeding 10 years, which will help to improve the company's debt structure, repay bank loans and supply working capital.
Shenzhen-based BYD, backed by billionaire Warren Buffett, saw its profit fall sharply in the first half as auto business slumped after the government phased out incentives for small-engine vehicles and market competition intensified.
In the first six months of this year, net profit at BYD fell 89 percent year on year to 275 million yuan, according to its first-half earnings report on Tuesday. Vehicle sales were down 23 percent to 220,131 units during the same period.
Shares of BYD gained 3.8 percent yesterday to HK$15.98 (US$2) in Hong Kong trading, the first rally in the past four trading sessions. Its shares have slumped more than 60 percent this year.
The issue of corporate bonds would enable BYD to reduce its funding costs but industry analysts remained skeptical about the carmaker's long-term profitability.
"The rapid sales growth of BYD is not likely to continue as the overall market slackens," said Lin Huaibing, an analyst at IHS Automotive. "Its most popular models like F3 sedan and F0 are facing more competitive rivals, from both home and overseas."
Wang Chuanfu, BYD chairman, earlier said he believes the firm's second-half sales will improve as new models are launched.
BYD's board of directors agreed that the corporate bond will have a term of maturity not exceeding 10 years, which will help to improve the company's debt structure, repay bank loans and supply working capital.
Shenzhen-based BYD, backed by billionaire Warren Buffett, saw its profit fall sharply in the first half as auto business slumped after the government phased out incentives for small-engine vehicles and market competition intensified.
In the first six months of this year, net profit at BYD fell 89 percent year on year to 275 million yuan, according to its first-half earnings report on Tuesday. Vehicle sales were down 23 percent to 220,131 units during the same period.
Shares of BYD gained 3.8 percent yesterday to HK$15.98 (US$2) in Hong Kong trading, the first rally in the past four trading sessions. Its shares have slumped more than 60 percent this year.
The issue of corporate bonds would enable BYD to reduce its funding costs but industry analysts remained skeptical about the carmaker's long-term profitability.
"The rapid sales growth of BYD is not likely to continue as the overall market slackens," said Lin Huaibing, an analyst at IHS Automotive. "Its most popular models like F3 sedan and F0 are facing more competitive rivals, from both home and overseas."
Wang Chuanfu, BYD chairman, earlier said he believes the firm's second-half sales will improve as new models are launched.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
