On the evening of July 22, information disclosed by the Hong Kong Stock Exchange's Easy Information System indicated that Warren Buffett's Berkshire Hathaway sold 13.955 million shares of BYD (002594.SZ, 01211.HK) on July 16, 2024. After the sale, Berkshire Hathaway still holds 4.94% of BYD's H-shares, with a total of 54.2 million shares. If Buffett further reduces his holdings in BYD, he will no longer be required to continue disclosure.

On July 23, BYD's A-shares fell by 4.66%, closing at 253.23 yuan; H-shares fell by 3.09%, closing at 238.4 Hong Kong dollars.

Some industry insiders believe that this represents Buffett's profit-taking from his investment in BYD over the past decade or so. Buffett may have concerns about future global electric vehicle support policies, and may also consider that compared to other holdings, BYD's valuation is not low. In addition, the recent increase in overseas tariffs has introduced uncertainties for BYD's overseas expansion, and there are more layouts for overseas factory construction.

Gradual "Profit-taking" from BYD

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The Hong Kong Stock Exchange's equity disclosure information shows that on June 11, the "stock god" Buffett's Berkshire Hathaway reduced its holdings in BYD again, with a reduction of 1.3475 million shares, resulting in a holding ratio of 6.9%. It can be seen that in just over a month, Buffett reduced his holdings in BYD's H-shares by nearly 2%.

After the reduction on July 16, it may be the last public disclosure of Buffett's holdings in BYD shares. The Securities and Futures Ordinance of Hong Kong stipulates that individuals and companies holding 5% or more of any class of voting shares in a listed company must disclose their interests and short positions in the voting shares of that listed company.

Wen Tianna, CEO of Broad Capital, told reporters from Yicai that Buffett's reduction is due to the need to redeploy the investment portfolio, which also includes concerns about global electric vehicle policies. From another perspective, there is also consideration for the layout of capital markets around the world.

"Buffett's reduction of BYD has started from two years ago. Looking at the investment history, the stock price has increased by about 30 times, and it is normal to take profits at such a high profit level," a Hong Kong analyst told Yicai reporters. After several reductions, the holding of H-shares is below 5%, and there is no need for disclosure in the future. It is expected that Buffett is very likely to gradually sell the remaining shares. From another perspective, Buffett's team's judgment on BYD is more about taking profits, and there may be new investment targets in the future.

Lin Jiayi, General Manager of Xuanjia Fund, told Yicai reporters that the valuation of electric vehicle companies is generally too high at present. After the penetration rate increases, the future growth rate will gradually slow down. As the price war intensifies, the return expectation is indeed declining. Whether electric vehicles can dominate the future also depends on the evolution of fuel vehicles or other new technological innovations, and it is not necessarily the endgame. Hu Kunchao, Investment Manager of Cheese Fund, said that Berkshire Hathaway's reduction of BYD's profits has been taken, and BYD's current price-to-earnings ratio is about 21 times, which is relatively high compared to Berkshire Hathaway's holdings such as Chevron, Occidental Petroleum, and Bank of America.

Future growth may come from "going global".The latest data shows that BYD achieved sales of 342,000 vehicles in June 2024, a year-on-year increase of 35%; in the first half of the year, BYD's cumulative automobile sales reached 1.613 million units, a year-on-year increase of 28.5%.

On March 27, at BYD's 2023 financial report investor communication meeting, Wang Chuanfu mentioned that the new energy industry has entered a phase of intense competition, and the years 2024 to 2026 will be decisive for scale, cost, and technology. The accelerated deployment of new energy products by Chinese car manufacturers will erode the market share of joint venture brands. Over the next 3 to 5 years, the share of joint venture brands is expected to drop from 40% to 10%, with 30% being the potential growth space for Chinese brands.

Overseas, with the European Union and other regions imposing additional tariffs, BYD is increasingly focusing on overseas factory construction.

On June 12, the European Commission announced new tariffs on the import of Chinese electric vehicles (EVs). As BYD cooperated with the European Commission's investigation into the import of Chinese-made electric vehicles, its tariff rate was set at a relatively low 17.4%.

In June, BYD sold 27,000 new energy passenger cars overseas. Later that month, the first batch of mass-produced new energy vehicles, the Song PLUS DM-i Champion Edition, officially rolled off the assembly line at BYD's Uzbekistan factory. The first phase of the factory plans to produce two plug-in hybrid models with an annual production capacity expected to reach 50,000 units to meet the market demand in Central Asia.

"Currently, the penetration rate of new energy vehicles in Thailand has reached 12%. According to experience, a market share of new energy vehicles exceeding 10% is a critical point, and after surpassing this point, there will be a leapfrog development. The new energy industry in Thailand is set to enter a golden period of development," said BYD Chairman Wang Chuanfu on July 4 at the completion ceremony of BYD's first electric vehicle factory in Southeast Asia.

On July 17, in response to investor inquiries, the head of BYD's investor relations stated that recently, BYD held a delivery ceremony for the first batch of 1,000 new energy vehicles in Indonesia.