Date
24 May 2017
BYD said demand for e-vehicles outstripped supply last year, helping the company enjoy strong margins. Photo: BYD
BYD said demand for e-vehicles outstripped supply last year, helping the company enjoy strong margins. Photo: BYD

New-energy sector continues to power ahead in China

With the Chinese economy weighed down by a host of factors, it’s worth focusing on businesses that are managing to hold their own and buck the downturn.

Among the notable bright spots is the new-energy sector.

Earlier this month, e-car maker BYD (01211.HK) revised upward its 2015 earnings forecast to an increase of between 518-557 percent compared to the 2014 level.

Demand for electric cars “experienced explosive growth” in the fourth quarter, the company said. Its plug-in hybrid vehicles enjoyed brisk sales and orders for the firm’s e-bus and e-cars have both been rising.

Brisk demand will help keep BYD’s production lines running at full capacity, which is crucial to a healthy margin and sustaining strong earnings.

Makers of battery and related products are also having a good time.

Hefei Guoxuan High-tech (002074.CN) predicted that its 2015 profit will show an expansion of 120-150 percent, an upward revision from the firm’s previous forecast for 80-110 percent gain.

Its new factory in Nanjing began operation in the fourth quarter, the perfect time to ride the booming battery market.

Tianqi Lithium (002466.CN) also lifted its full-year earnings forecast, as volume and price gains in its products contributed to rising sales and better margin.

New-energy is a critical part of China’s manufacturing upgrade strategy, as well as a key component of its plan to cut pollution.

Given the supportive policies, the sector should stay relatively immune to the general economic slowdown.

– Contact us at [email protected]

RC

EJ Insight writer

EJI Weekly Newsletter

Please click here to unsubscribe