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BYD shares nosedive after US$5.6 billion placement announcement

The EV maker’s rationale for the share sale is reasonable, despite the short-term share-price drop on the news, an analyst says

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A BYD vehicle sits in a show room in Tsim Sha Tsui in Hong Kong on October 3, 2024. Photo: Jelly Tse
Yujie Xue
Investors rebuked BYD for its surprise stock placement plan by selling down the shares of China’s biggest electric-vehicle (EV) maker, erasing US$7.3 billion of its market value in one of the worst sell-offs since its Hong Kong listing in 2002.

The shares sank 6.8 per cent in Hong Kong to HK$339 on Tuesday, knocking HK$27 billion (US$3.5 billion) from its market capitalisation. In Shenzhen, the firm’s A shares tumbled 4.3 per cent to 344.84 yuan, wiping off 27.8 billion yuan (US$3.8 billion) of value.

Shenzhen-based BYD announced on Tuesday that it planned to sell 129.8 million H shares to at least six outside parties at HK$335.20 each, a discount of 7.8 per cent from the closing price of HK$363.60 on Monday, according to a filing to the Hong Kong stock exchange. BYD said it planned to use the expected proceeds of HK$43.5 billion to invest in research and development, as well as to expand its overseas business.

The sale would be the biggest post-IPO fundraising by BYD since its listing in Hong Kong in 2002. In 2021, it raised HK$29.9 billion from a share placement.

The placement would also be the largest of its kind in Hong Kong in four years. Chinese food delivery giant Meituan raised US$10 billion in 2021 through a combination of a top-up placement and convertible bonds.

Analysts said the move reflected BYD’s ambition to double down on its research and overseas expansion efforts amid intensifying competition in the EV sector, as well as positive sentiment towards Hong Kong stocks and A-shares ahead of Beijing’s annual “two sessions” meetings.
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