Source: Brokerage China Author: Zhou Le

According to the disclosure of the Hong Kong Stock Exchange's easy-to-use information, on June 11th, Berkshire Hathaway, the "stock god" Buffett's company, reduced its holdings of 1.3475 million shares of BYD H shares, with an average price of HKD 230.46 per share, a reduction of HKD 310 million, and a holding ratio decreased from 7.02% to 6.9%.

From the market perspective, Buffett's reduction has not affected the trend of BYD's stock price. Recently, BYD's stock price has continued to rise. As of the close on June 17, BYD H shares rose by 1.74%, to HKD 233.4 per share, a cumulative increase of 41.2% from the low point in February of this year. During this period, BYD's A-share price has increased by as much as 58%.

On the news side, BYD is initiating an explosive sales mode, and there are even market rumors that the orders for Qin L have exceeded one million vehicles. In response, Li Yunfei, general manager of the brand and public relations department of BYD, revealed in a live broadcast that the order volume of the two new cars is indeed very high, and for the time being, the data will not be disclosed.

Buffett takes action.

According to the disclosure of the Hong Kong Stock Exchange, Berkshire Hathaway, the "stock god" Buffett's company, reduced its holdings of 1.3475 million shares of BYD H shares on June 11, with an average price of HKD 230.46 per share and a reduction of HKD 310 million. The holding ratio decreased from 7.02% to 6.9%.

According to the disclosure of the Hong Kong Stock Exchange, after this reduction, Berkshire Hathaway holds 75.6861 million shares of BYD H shares.

It is reported that Berkshire Hathaway purchased 225 million shares of BYD H shares at a price of HKD 8 per share in 2008, holding them for a long period of fourteen years, until it began to reduce holdings for the first time in August 2022. This means that Berkshire Hathaway has sold more than 149 million shares of BYD H shares, and the number of shares reduced has exceeded 60%.

According to the disclosure rules of the Hong Kong Stock Exchange, when major shareholders increase or decrease their stock holdings, they only need to disclose when they cross a certain integer percentage. So far, more than ten disclosures have been made.

On October 31 last year, according to the data of the Hong Kong Stock Exchange, Berkshire Hathaway, the company under Buffett, reduced its holdings of 820,500 shares of BYD H shares on October 25, 2023, and its shareholding ratio also dropped from 8.05% to 7.98%.

From the market perspective, recently, BYD's stock price has continued to rise. As of the close on June 17, BYD H shares rose by 1.74%, to HKD 233.4 per share, a cumulative increase of 41.2% from the low point in February of this year. During this period, BYD's A-share price has increased by as much as 58%.

On the news side, since the launch of BYD Qin L, the market's expectations for the company's sales have increased significantly. Although the market rumors that the orders for Qin L exceed one million vehicles have not been confirmed, data obtained from multiple channels shows that orders for BYD's related models have continued to increase significantly.

According to the news released by BYD automotive on the 17th, the new generation of commuter car "Sea Gull" sold 35,370 units in May and won the monthly sales champion of pure electric cars + A00 vehicle models.

There is also news circulating on the internet that within less than half a month of being listed, the cumulative orders for Qin L DM-i have reached 1 million vehicles, and the cumulative orders for Sea Lion 06 DM-i have reached 900,000.

In response to this, Li Yunfei, general manager of BYD's brand and public relations department, revealed in a live broadcast that the order volume of the two new cars is indeed very high, and for the time being, the data will not be disclosed. Li Yunfei said: "The most urgent task is to do a good job in the production and delivery of the two cars, as well as customer service."

According to statistical data, BYD added about 140,000 new orders from June 1 to 10, with a weekly increase of 100,000-105,000 orders.

At the same time, the latest progress has also come from BYD's new car. On June 17, it was announced that the Ministry of Industry and Information Technology had released the "Catalog of Energy-Saving New Energy Vehicle Models for Enjoying Tax Reduction and Exemption for Cars and Ships" (the 63rd batch). A total of 28 plug-in hybrid passenger cars were included, many of which are popular new cars that are about to be launched.

BYD's brand-new Song L DM-i model has been declared, and it should be pointed out that this car is not the hybrid version of the pure electric Song L, but more like the Song PLUS of Wangchao.com.

According to the query information, the car is equipped with a 1.5L engine with a maximum power of 74 kW, matched with 18.316 kWh and 26.593 kWh battery packs, corresponding to pure electric endurance ranges of 91 and 128 kilometers under WLTC condition. The fuel consumption per 100 kilometers is 4.95 and 4.98 liters. In other words, BYD's fifth-generation DM hybrid has further optimized fuel consumption.

Analysts pointed out that the Song L DM-i is expected to be launched soon; after that, there may be the Han L DM-i and Tang L DM-i.

In terms of performance, in the first quarter of 2024, BYD achieved a revenue of 124.94 billion yuan, a year-on-year increase of 3.97%, and a net income attributable to the parent company of 4.57 billion yuan, a year-on-year increase of 10.6%. With the continuous increase in sales, the combined benefits of economies of scale and lower battery prices, the company's gross margin reached 21.88%, an increase of more than 4 percentage points compared to the same period last year.

Buffett made a fortune.

As we all know, the "stock god" Buffett has always been known for his long-term value investment, and he has held BYD for up to fourteen years.

At this year's Berkshire Hathaway shareholder meeting in May, Buffett reminisced about Munger and said:"There were two occasions when Munger disagreed with me, were recommending to invest in BYD and Costco. Both times Munger strongly demanded to buy. Looking back now, both of these decisions were correct according to Munger."

Looking back, in 2008, at Munger's suggestion, Buffett met BYD founder Wang Chuanfu and invested in BYD, holding BYD's shares for a long time. In September of that year, Berkshire Hathaway under Buffett subscribed to 225 million shares of BYD Company's shares at a price of HKD 8 per share, with a total transaction amount of approximately HKD 1.8 billion.

In the following years, BYD stock price fell sharply, but Buffett and Munger still held the stock steadily, and publicly supported BYD and its founder Wang Chuanfu on several occasions. Munger said:"I have found a Chinese auto company that looks like a mix of Edison and Welch."

On August 24, 2022, Buffett reduced his position in BYD for the first time. From 2008 to 2022, during the fourteen-year period, BYD's Hong Kong stock price reached as high as HKD 326.4 per share. Based on this calculation, Buffett's investment return from investing in BYD reached approximately 38 times the initial investment amount.

In the past two years, Buffett has continuously reduced his position in BYD, and his shareholding ratio has dropped from 19.92% in August 2022 to the current 6.9%.

Analysts pointed out that in the more than 10 years of investing in BYD, Buffett has made a lot of money. Therefore, it is a normal choice for him to make certain profit-taking, perhaps a routine operation of the "stock god" Buffett.

Editor/Lambor