"Stock God" Buffett's success in investing in BYD has long been a well-known story, achieving more than 30 times the return in 14 years.
However, over the past two months, Hong Kong stocks rebounded by nearly 7,000 points, but Buffett continued to cash out BYD.
The Hong Kong Stock Exchange's equity disclosure information shows that in just half a year, Buffett has reduced his holdings of BYD by more than 70 million shares, cashing out approximately HK$15 billion.
According to the market participants interviewed by China Business News, the valuation of the new energy sector is too high. With the arrival of product price cuts, the competition is becoming more and more fierce. Coupled with the increase of interest rates by overseas central banks, the adjustment pressure on these high-valued sectors will increase. On the other hand, the financing climax of the electric vehicle industry chain in the first half of 2022 has passed, and related companies have no motivation to support stock prices.
Cash out HK$15 billion in half a year
The Hong Kong Stock Exchange’s equity disclosure information shows that after Buffett’s Berkshire Hathaway reduced its holdings by 1.058 million shares at an average price of HK$191.44 on January 3, 2023, its holdings have been reduced to the remaining 153.3 million shares. The shareholding ratio of BYD H shares was reduced to 13.97%.
Compared with the 225 million shares he held before starting to cash out in July 2022, Buffett has reduced his holdings by 71.7 million shares in less than half a year, and his holdings have dropped by more than 30%.
If calculated conservatively based on the average price of the reduction of about 200 Hong Kong dollars, Buffett's cash amount is about 15 billion Hong Kong dollars.
As early as 225 million shares of BYD were transferred to Citibank on July 11, 2022, market participants had already begun to speculate that Buffett was about to start reducing his holdings of BYD.
On August 24, 2022, the Hong Kong Stock Exchange’s equity disclosure information showed for the first time that Berkshire began to reduce its holdings of BYD. On that day, it reduced its holdings by 1.331 million shares at HK$277, reducing its holdings to 218.8 million shares, and its shareholding ratio in H shares was changed to 19.92. %.
Considering that the reduction of holdings needs to be disclosed every full percentage point of the change, Buffett actually started the reduction of holdings earlier than August 24.
However, Buffett's substantial reduction in holdings did not shake the confidence of some domestic star institutions in BYD's holdings.
According to BYD's third quarterly report for 2022, the "Shanghai Gaoyi Asset Management Partnership (Limited Partnership)-Gaoyi Xiaofeng No. 2 Letter Fund" managed by the well-known fund manager Deng Xiaofeng entered the list of top ten shareholders, holding 7.54 million shares. Accounting for 0.33% of the total share capital, many other public funds also have a large number of products to continue to increase their holdings of BYD.
Although the Hang Seng Index rebounded sharply by more than 40%, BYD's low point of 161.7 Hong Kong dollars rebounded only about 25%, and it closed at 201.4 Hong Kong dollars on January 9.
A reporter from China Business News combed through the public information and found that BYD’s two H-share financings were when the market was frenzied. The two additional issuance prices were 225 Hong Kong dollars and 276 Hong Kong dollars.
A high-level private equity person who has cashed out individual stocks in the upstream of the new energy industry chain told Yicai Global that in June 2022, many companies in the electric vehicle industry chain will intensively raise funds (BYD does not have equity financing at this stage), and the market has already become hot. After the completion of major financing projects, these companies have little incentive to stabilize their stock prices.
From a fundamental point of view, the upper, middle and lower reaches of the industrial chain are all maturing, and the impact of the macroeconomic environment in the future will inevitably be affected.
Judging from BYD's past two H-share financings, the industry is actually in a period of vigorous development. The stock price reflects the excitement of the market sentiment at that time, and being able to raise funds at a higher stock price also fully caters to the psychology of investors.
On January 21, 2021, BYD announced that it will place 133 million H shares, with a total proceeds of approximately HK$30 billion. The placement price of this placement of H shares is HK$225 per share; According to the announcement, after the market closed on October 29, BYD successfully completed the placement of 50 million new H shares at a price of HK$276.0 per share. A total of about 44 billion Hong Kong dollars was raised.
Challenged by Tesla's price cuts
In 2023, with the sharp price cuts of its main competitor Tesla, how BYD will fight back has also become the focus of investors' attention.
Following the price cut on October 24, 2022, at the beginning of the new year, Tesla’s domestically-produced models once again cut prices sharply. Market participants believe that BYD, one of the main competitors, will be affected to a certain extent. In the past, the price increase of BYD products did not affect sales, but in the future it will There are uncertainties.
On January 6, according to Tesla China’s official website, the prices of all Tesla’s domestic models were cut. Among them, the starting price of Model 3 was reduced to 229,900 yuan, and the starting price of Model Y was reduced to 259,900 yuan, setting a record low price.
Tao Lin, vice president of Tesla China's external affairs, posted on Weibo: "Behind Tesla's price adjustment, there are countless engineering innovations. Adhere to cost-based pricing, respond to the country's call with practical actions, promote economic development, and release consumption. potential."
On January 7, a reporter from China Business News saw at the Guangzhou Auto Show that the flow of people on Saturday was far worse than that of the November 2021 Auto Show.
The reporter communicated with a number of exhibitors and learned that major car companies and sales organizations have not responded to Tesla's price cuts.
In addition, because subsidies and tax incentives have passed by the end of 2022, some consumers' car purchase needs are forwarded to the fourth quarter of 2022. The sales of this year's auto show are not as good as before, and the first quarter is not expected.
Lin Jiayi, CEO of Xuanyi Metal, told the first financial reporter that the current industry cycle is at the top, and fierce competition is accelerating the peak. The decline in future profits will lead to a decline in both volume and price. Tesla's industry competitiveness is still relatively strong, which will lead to orders from competitors. decline.
In 2022, BYD will defeat Tesla to regain the global new energy vehicle sales crown. The sales report shows that in 2022, BYD will sell 1,857,400 new energy passenger vehicles, including 911,100 pure electric vehicles and 946,200 plug-in hybrid models car.
In contrast, Tesla's global sales in 2022 will be 1.3139 million vehicles.
On January 5, before Tesla’s official price cut, BYD released a new high-end car brand “Looking Up” and its core technology “Easy Sifang”, with a product price of over one million yuan.
Multiple product price increases in 2022 did not affect BYD's sales.
Xue Yuhu, an analyst at Guohai Securities, said that in 2022, BYD will exceed the expected sales target, and will focus on "new product launches, capacity expansion, high-end brands, overseas markets, and profit optimization" in 2023.
Although product prices have risen, on the one hand, due to "locking orders" to promote consumers to place orders, and on the other hand, BYD's products still have a very competitive price/performance ratio, so the products still have a strong competitive advantage.
At present, BYD's new energy vehicle footprint has covered more than 70 countries and regions. With the rapid advancement of the company's new energy passenger vehicle overseas plan, overseas markets are expected to become another important growth point for sales.