UPDATE 2-China's BYD says Buffett wants to raise stake

Mon Aug 31, 2009 5:02am EDT

* BYD expects to sell electric car in US in 2010

* BYD keen on mainland A-share listing, maybe in the next yr

* Multinational automakers in talks to buy BYD batteries

* Shares close up 8 pct in weak HK market (Adds details and analyst comments)

By Joanne Chiu

HONG KONG, Aug 31 (Reuters) - U.S. billionaire Warren Buffett intends to raise his stake in Chinese electric car and battery maker BYD Co Ltd (1211.HK), BYD's chairman said on Monday, sending shares in his company up 8 percent.

MidAmerican Energy Holdings, a unit of Buffett's Berkshire Hathaway (BRKa.N), bought 10 percent of BYD for $230 million or about HK$8 a share last September, sparking a massive rally in the stock. [ID:nN26317503]

"MidAmerican has always intended to raise its stake in BYD because it believes BYD has good prospects in the development of renewable energy, but we are still considering (whether to sell more)," BYD Chairman Wang Chuanfu told reporters on Monday.

BYD, Hong Kong's largest listed auto stock, also said it expects to sell its e6 electric car in the United States in 2010, a year ahead of schedule.

"BYD shares are not cheap at the current price level, but since the company's strategy is in line with Beijing's policy, and with the support of Buffett, the market is willing to pay a premium for that," said Ben Kwong, the chief operating officer of KGI Asia.

China's government has been encouraging local automakers to focus on more fuel efficient models and environmentally friendly technologies.

BYD shares rose 8 percent to close at HK$48.6 on Monday, more than six times what MidAmerican paid and valuing the company at about $13 billion. The benchmark Hang Seng index .HSI fell 1.9 percent.

AMBITIOUS PLANS

BYD has ambitious plans for its hybrid and rechargeable electric vehicles, aiming to sell as many as 9 million units by 2025 to take on heavyweights like General Motors [GM.UL] and Toyota Motor Corp (7203.T).

It launched a gasoline-electric hybrid electric car, F3DM, in China last year and expects to sell its all-electric car e6 to the United States in 2010, a year earlier than its original 2011 target. BYD says the e6 is capable of driving 400 kilometres (249 miles) on a single charge.

"e6 will be launched in the United States by the end of 2010 and they are now being tested under U.S. regulations," Wang said.

The electric cars will be sold in Shenzhen first in the fourth quarter of 2009 and will gradually expand to other cities in China, he added.

BYD has sold about 100 F3DM cars to governments and corporates and plans to sell to individual customers starting in September.

It sold a total of 180,000 vehicles in the first half of the year, up 1.5 times from a year ago, which helped nearly double its net profit to 1.18 billion yuan ($173 million) for Jan-June.

BYD said it now hopes to exceed its 2009 sales target of 400,000 vehicles.

For result statement, please click here 0830046.pdf

CHINA LISTING

BYD is keen on a stock market listing in mainland China and may look to do so in the next year, Wang said.

The company has previously said it planned to issue up to 100 million A shares on the Shenzhen stock exchange to raise capital for development projects [ID:nHKG366024].

The issue could be worth HK$4.6 billion ($594 million) based on its share price on Monday.

BYD, which began life as a maker of rechargeable batteries in Shenzhen in 1995, is in talks to sell its batteries to multinational car makers including Volkswagen (VOWG.DE).

"Batteries are our core products and we are willing to supply them to companies in the same industry," Wang said. ($1=HK$7.751=6.830 yuan) (Writing by Alison Leung; Editing by Jacqueline Wong and Lincoln Feast)

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