If there’s anything about BYD ‘s past that could predict its future, it’s being slow and steady. The nearly 30-year-old company may have beat Tesla in total car production in 2023 , but it still only has one tenth the market value. Last year, Tesla’s shares roughly doubled in price. BYD’s rose by about 10%. Bernstein didn’t even initiate coverage of BYD until September, with an outperform rating and price target of 359 Hong Kong dollars. The upside as of Thursday’s close was 71% — far more than the 42% printed at the time of coverage initiation. Are there problems, such as oversupply, the market is overlooking? News that its famous early investor, Warren Buffett’s Berkshire Hathaway, keeps trimming its stake for unspecified reasons doesn’t help foreign investor sentiment. One factor behind the low valuation is that BYD isn’t dominating flashy markets like Norway that “would probably have a greater impact on stock price” than electrifying cars in Brazil, said Taylor Ogan, CEO of Snow Bull Capital. Another issue is lack of financial research analysts, especially covering both Tesla and China, he said. BYD trades in Hong Kong, and on the Shenzhen exchange in mainland China. The company primarily sells its passenger cars in China, with some expansion to regions such as southeast Asia and Europe, but not North America. In contrast, Nasdaq-listed Tesla’s main market is the U.S., while China accounts for about 20% of revenue. An energy company? Elon Musk’s automaker also had a hard time convincing Wall Street to buy it until the last few years . “I’m a long observer and investor in Tesla,” Ogan said. “For many, many years it was very frustrating. Broadly the excuse was, Wall Street, they don’t understand Tesla.” Ogan moved with his team of three to Shenzhen, China, in January 2023 to open a research office. BYD got its start in batteries and has a giant campus on the outskirts of Shenzhen. The company has cut costs by developing the expensive car battery in-house,…
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