Energy Transition

BYD Stock on the Rise: Factors Driving Growth Towards a Target Price of $35

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Warren Buffett-backed BYD stock Posts Record Quarterly Profit as Chinese Buyers Flock to Affordable EVs

BYD (BYDDF) the world’s largest electric vehicle EV maker and backed by legendary investor Warren Buffet, has just shattered records with its latest earnings report. The Shenzhen-based carmaker reported a 12-fold profit growth to 7.3 billion yuan (US$1.06 billion) in the three months to December, compared to 602 million yuan a year earlier. This surge in profit was driven by a 156.7% jump in sales to 683,440 units, as mainland Chinese buyers lapped up BYD’s value-for-money EV models.

BYD stock’s Blade Lithium-Ion Phosphate Battery Packs and Plans for Expansion

BYD’s success can be attributed to its focus on affordability and quality. Most of BYD’s vehicles are priced below 200,000 yuan, making them a great option for middle-class consumers who are looking for an affordable EV. In addition, BYD’s blade lithium iron phosphate battery packs have proved their quality with drivers and carmakers, and have even been supplied to Tesla’s factory in Berlin.

Beyond its successful Q4 earnings report, BYD will need to continue to innovate and offer new models that appeal to consumers in order to remain competitive in the increasingly crowded EV market. The company’s ability to maintain its position as a leader in the affordable EV market in China and expand its business overseas will be key to its long-term success

BYD’s joint venture with Toyota to develop electric cars and batteries, as well as its investments in battery technology, will also be crucial to its future growth. These factors could help BYD to stay ahead of its competitors and continue to drive positive change and growth in the global economy.

Buy Case for the BYD Stock

BYD’s record-breaking Q4 earnings report highlights the growing demand for affordable and high-quality EVs in China, as more consumers look to reduce their carbon footprint and improve air quality. With Warren Buffett’s backing and a focus on affordability and quality, BYD is well-positioned to capitalize on the growing EV market in China and beyond. However, the company will need to continue to innovate and expand its business in order to remain competitive in the crowded EV market. 

The key factor that is going to move the needle for the stock herein after for the  investors is on BYD’s ability to maintain its position as a leader in the affordable EV market and its progress in expanding its business overseas. If BYD is able to continue to grow and expand its business while maintaining its focus on affordability and quality, it could lead to continued growth in the company’s stock price. However, any setbacks or challenges in the EV market or with the company’s expansion plans could negatively impact its stock price.

Technical Chart Analysis

The stock had peaked as high as $43 in June 2022 post which the stock has been just trading in ranges and forming lower high and lower lows. As seen in the chart above it has been a long consolidation around the donchain channel and now the stock is ready for a upward journey which is apparent as we see RSI of above 55. The record Q4 earnings , leadership position in the EV market and plans for expansion and innovation going forward indicate stock is poised to start its upward journey and a buy signal for the stock on technical grounds.

Fundamental Analysis : Valuation Theory

As seen above , we can clearly see BYD is undervalued and the risk-reward is highly favorable for the stock as it trades at $28.16 now. On a base case scenario BYD trades at EV/Sales of 1.9 x which leads to the stock’s intrinsic value at around 35.84. We believe BYDDF should be bought at current levels and accumulated for a target price of 27% from spot of $35.84. 

Check out on our research on Battle of EV titans :

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