BYD shares crash after critical report

Shares of Shenzhen-based automaker BYD Co slumped on both the Shenzhen and Hong Kong stock exchanges for the second consecutive day, after brokerage CLSA said the company was worth less than a thirtieth of its current price.

Shares of the company, backed by US billionaire Warren Buffet, dropped 9.8 percent Wednesday in Hong Kong to HK$13.26 ($1.71) after a 4 percent drop Tuesday, and its shares also fell 5.35 percent Wednesday in Shenzhen to 13.99 yuan ($2.22) after a 0.4 percent decrease Tuesday.

BYD's operations in the first half of 2012 were worse than expected, and the company's mobile phone components, rechargeable batteries and new energy businesses will further worsen, CLSA analyst Scott Laprise wrote in a report Tuesday morning.

In the report, CLSA slashed BYD's target price to HK$0.41, or 97 percent lower than its current price.

In the first half of the year, BYD's net profit dropped 94 percent year-on-year to 16.27 million yuan, the company said in the first-half financial report released in late August.

BYD spokesmen refused to comment on the CLSA's report or the automaker's move to restore investors' confidence when reached by the Global Times Wednesday. The Hong Kong Economic Times cited Li Qian, secretary of BYD's board of directors, as saying that "CLSA's conclusion was absurd."

The automaker has gotten through the worst period and is improving its auto, battery and new energy products, said Li.

CLSA's analysis didn't correspond to BYD's current situation, Zhang Zhiyong, an independent auto analyst, told the Global Times Wednesday.

The company has expanded its product line of vehicles and it is growing, but at a slowed rate, said Zhang, "BYD's internal management and business model failed to keep pace with the company's fast development in the past years, which brought problems, but it is taking measures for improvement."

BYD is also expanding its market for electric vehicles, Gong Yongfeng, an analyst with Dongxing Securities, wrote in a research note Tuesday. Hundreds of BYD electric buses are already in operation in Shenzhen.