Countries around the world are stepping up their efforts to fight climate change. Since CO2 emissions are the primary cause of increasing global temperatures, many governments have implemented incentives for the development of clean technologies, including electric vehicles. They are also increasing financial aid for vehicle manufacturers engaging in the production of green cars, such as lower taxes and contributions on production and social security.
Although EVs are still quite expensive for many of us, the global EV market is foreseen to grow to nearly $805 billion in less than six years' time, for a four-fold increase from the 2020 level. The Asia-Pacific market is projected to be the largest contributor in terms of revenue, reaching up to 45% of the total EV market In the meantime, hybrid vehicles represent a cheaper solution to go green.
BYD Co Ltd (BYDDF, Financial) (BYDDY, Financial) is a Chinese EV company that is already benefitting from the Asian market EV tailwind. The Shenzhen-based automaker is the largest producer of EVs in mainland China, and it recently saw June sales jump 192% year over year to 41,000 units.
In the first half of this year, BYD supplied the market with 154,600 units, including pure electric vehicles and plug-in hybrid electric vehicles. The number of units was up approximately 155% compared to the same period in 2020.
Looking ahead to full-year 2021 and 2022, the company expects to increase its Ebitda and earnings per share on revenue of $29.6 billion for 2021 (up 23.5% year over year) and $35.96 billion for 2022 (21.6% year over year). This should give a boost to shares of the automaker. As of its most recent results, the company is holding $30 billion in cash on hand and $52 billion in total debt.
Below is the price chart for BYD's Class H shares, which trade under the BYDDF ticker. The share price was at $28.23 in early trading on Monday for a market capitalization of $98.67 billion and a 52-week range of $8.58 to $35.94.
Below is the price chart for BYD's standard American Depository Receipts, which trade under the BYDDY ticker. The share price was at $56.3 in early trading on Monday for a market capitalization of $80.61 billion and a 52-week range of $17.62 to $72.91.
The price-earnings ratio is 122.35, the price-sales ratio is 3.05 and the enterprise-value-to-Ebitda ratio is 71. The price is high, but on Wall Street, the stock still holds a recommendation rating between hold and overweight, indicating that analysts are generally more bullish on the stock.
Disclosure: I have no positions in any security mentioned.
