An EV Pureplay At A Comparatively Inexpensive Valuation
$BYD Co. (BYDDF.US)$ BYD is diversified, growing quickly, and poised to benefit not only from its own EV sales growth, but, thanks to its battery operations, also from the EV sales growth from other automobile companies. Still, BYD is trading at a rather inexpensive price:
While $Tesla (TSLA.US)$, the current EV king, is trading at 26x trailing revenue today, BYD is valued at less than 4x trailing revenue -- despite the fact that it grew its EV sales by more than 210% in October, thereby growing much faster than Tesla. I do not believe that BYD should trade at 25x revenue at all, as I do believe that this also is not a fair valuation for Tesla. Still, at a massive discount to Tesla and even its Chinese EV peers such as $NIO Inc (NIO.US)$ , $XPeng (XPEV.US)$ , and $Li Auto (LI.US)$ , BYD seems like an attractively priced player in this generally rather expensive space. BYD trades, it should be noted, at a premium compared to legacy automakers, but that premium is relatively slim when compared to the valuations other EV players are trading at. At less than 4x trailing revenue, BYD does not look especially expensive, considering its solid market position, strong market tailwinds, and rapid sales growth. Buffett's Berkshire Hathaway holds a multi-billion dollar stake in BYD, suggesting that BYD is one of the best values in this space -- after all, Buffett is an archetypical value investor.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
2znASYonpa : Great write up, but you may be mistaken that BYD "is not selling any EVs in the US yet" -- depending on your definition of EVs.
It states that BYD has "more than 1,000 vehicles on the road or in production in the United States. BYD is creating hundreds of American jobs, making battery-electric buses that are helping to clean our air while improving efficiency and the bottom line for our customers."
vk3XubZ0kD : Another china EV looks like a cheap stock & they seem to be doing well both with Batteries & there EV.But I wouldn’t buy any of china’s Pink Sheets.
YCUMO : Thanks for this article. I'm intrigued, but too bad it's a Chinese company listed on the Pink Sheets. That's not a sandbox I want to play in.
blacklemontea : Interesting but I don't invest in China. I just don't invest in countries that have no rule of law.
Alibabamascot blacklemontea : You invest in the US? Where a former president went after business, such as amazon, where its leaders that opposed him infuriated him? Where he went after blue states, states that didn't support him, by pushing an agenda to cut their home mortgage tax deductions significantly in retaliation, and got that done because he had the power of both houses of congress? You mean that kind of no rule of law, only rule of spite?
Hearts Gainer blacklemontea : Funny you should say that. The Anti-trust laws used to penalize Alibaba for requiring exclusivity agreements were all written by US legal scholars brought over to China to try to implement "rule of law" in the "wild wild west" entrepreneurial, e-commerce/internet growth scenario that was developing there, beginning in the late 1990s and really taking off in the 2000s.
The Antitrust code was formally adopted by CCP in 2008, and followed similar banking and company laws, developed and implemented in the 1990s (also with the help of US legal scholars). The Banking Commission that enforces Banking Law was founded in 2003. The actions taken against Ant Group regarding lending practices and various other actions are all in accordance with the provisions of these laws. Enforcement was kind of lax before Jack Ma shot off his mouth. I guess he should get some credit for the enforcement of Antitrust and Banking laws already on the books.
GROW sky Hearts Gainer : "Enforcement was kind of lax before Jack Ma shot off his mouth. I guess he should get some credit for the enforcement of Antitrust and Banking laws already on the books."
Lol! But isn't it curious how trump went after amazon and xi after alibaba.
LarryCheungCFA : Looks like its at a peak on the charts. Consider shorting. LOL.