By Mark Lee
Aug. 31 (Bloomberg) -- Warren Buffett’s MidAmerican Energy Holdings Co. wants to boost its stake in BYD Co., said Wang Chuanfu, chairman and chief executive officer of the Chinese company. BYD shares rose to a record.
“They are very positive about BYD’s business,” Wang told reporters in Hong Kong today. BYD will discuss plans by MidAmerican to increase its investment, he said. Ann Thelen, a spokeswoman at MidAmerican, didn’t immediately reply to an e- mail seeking comment.
BYD has surged more than five-fold in Hong Kong trading since September 2008, when it first disclosed the HK$1.8 billion ($232 million) initial investment from MidAmerican, a unit of Berkshire Hathaway Inc. The transaction has generated a profit of more than $1 billion for the U.S. power producer, according to Bloomberg data.
“If Buffett were to make an additional investment in BYD, the deal’s pricing will provide a benchmark for the stock’s value,” said Barry Leung, who rates BYD shares “buy” at Sun Hung Kai Securities in Hong Kong. “BYD’s shares have run up a huge amount following Buffett’s initial investment, so even if they can agree a discount to the current stock price, it will still be a lot more than what they paid in the first deal.”
BYD, China’s seventh-biggest carmaker, rose 8 percent to close at HK$48.60 in Hong Kong, compared with a 1.9 percent drop in the city’s benchmark Hang Seng Index. The stock traded at HK$8.40 on Sept. 26, 2008, a day before MidAmerican announced its proposed investment. The U.S. company last month completed its acquisition of BYD shares at HK$8 each.
MidAmerican will help BYD’s plans to expand in the North American market, Wang said today. The Chinese company now aims to start selling an electric-powered vehicle in the U.S. next year, earlier than its previous target of 2011, he said.
BYD plans to sell shares on the mainland next year, Wang said today. The company last month said it is seeking regulatory approval to offer 100 million so-called Class A shares in Shenzhen, where the company is based.
The company’s car revenue more than doubled to 8.88 billion yuan ($1.3 billion) after it added models including the F3-R compact, and China cut taxes on smaller vehicles to boost industrywide demand. The gain offset slumping demand for mobile-phone batteries as consumers worldwide pared spending on electronics amid the global recession.
First-half net income rose 98 percent to 1.18 billion yuan from a year earlier, the company said yesterday. Revenue increased 30 percent to 16.1 billion yuan.
BYD more than doubled first-half vehicle shipments to 176,814 autos, outpacing a 26 percent gain in nationwide passenger-car sales.
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