BYD shares slide after Chinese car giant witnesses steep fall in quarterly profit

Shares in electric vehicle maker BYD slid on Monday after it reported quarterly profit had fallen for the first time in more than three years, hit hard by a cutthroat price war that is plaguing China’s auto industry.Net profit at the world’s biggest EV producer tumbled 30% in the second quarter to 6.4 billion yuan ($895 million) from a year earlier, it reported. That followed a doubling of profit in the first quarter.

Both its Hong Kong-listed shares and Shenzhen-listed shares were down about 5% in morning trade. Its Hong Kong-listed stock sank 8% at the open, marking its biggest one-day percentage decline since May 26.

Citi analysts said in a client note that BYD’s net profit missed a consensus estimate of 7-9 billion yuan and their forecast of 10.3 billion yuan.They noted that price cuts had failed to improve sales sufficiently and that BYD had paid a 1 billion yuan special incentive to dealers during the period.

BYD is targeting global sales of 5.5 million cars this year, but as of the end of July, it has sold just 2.49 million, equal to 45% of its goal. It is set to report August sales later on Monday.

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