BYD gets approval for Shenzhen A-share listing

Global Times - Auto and battery maker BYD Company announced that it had received approval from the China Securities Regulatory Commission for an A-share listing on the Shenzhen market Tuesday. It plans to issue up to 79 million shares.

The company said in a filing with the Hong Kong Stock Exchange that the lead underwriters for its A-share issue would conduct a preliminary price consultation from June 9 to June 16, 2011. The issue price will be fixed on June 20, and subscription to the offering will begin on June 21.

The funds raised will be used to build a facility for lithium battery production, to establish an auto research and development center, and to expand its auto parts business.

The Shenzhen-based company's auto sales rose 16 percent to about 520,000 units in 2010, although this fell short of its forecast of sales of 800,000 autos. BYD's net profit dropped 33 percent to 2.5 billion yuan ($386 million) in 2010.

"The auto sales of BYD last year were not so good actually, and didn't reach the target they had planned. BYD needs to raise more money to help with development, especially in the research and development of new energy," Zhang Yu, managing director with industry research firm Automotive Foresight Co, told the Global Times on Wednesday.

Zhang said BYD had stalled in its development of cheaper and mid-priced cars, and that it would be hard for it to succeed in the high-end market.

"It's a good idea to develop new-energy autos. The problem is the high price and the technology lag, and it's really not convenient for drivers to charge batteries when they're out of electricity on the way home," Zhang added.

"With growing competition in the domestic car market and constantly changing consumer demand, the company's auto business will face a tougher challenge," BYD said in its A-share prospectus.

BYD said its plan to make environmentally efficient vehicles is subject to changes in government policy.