Buffett backed BYD opens up 22pc in China debut

SHANGHAI: Shares in Chinese car maker BYD, backed by US billionaire Warren Buffett, soared more than 22 percent Thursday as it made its debut on the Chinese mainland.

BYD opened at 22 yuan ($3.40) on its first day of trading in the southern Chinese boomtown of Shenzhen, which borders Hong Kong, compared with an initial public offering price of 18 yuan.

The company raised a lower-than expected 1.4 billion yuan in a share offering earlier this month. BYD previously indicated the IPO was expected to raise 2.19 billion yuan.

BYD has said the proceeds of the offering will be invested in a lithium-ion battery project, a research and development centre and expanding its product line, which will require total investment of around 5.4 billion yuan.

The IPO comes at an uncertain time for the world's top auto market, which has seen year-on-year sales fall for two straight months as authorities phase out most sales incentives implemented to ward off the global downturn.

BYD, already listed in Hong Kong, said Wednesday its first-quarter net profit shrank 84 percent because of increased costs and falling sales.

The firm earned 266.7 million yuan in the three months ended March 31, well below its 1.7 billion yuan net profit in the same quarter last year.

"This was mainly due to a decline in automobile sales performance coupled with an increase in management and finance expenses," BYD said in a statement.

Buffett put BYD, which stands for Build Your Dreams, into the international spotlight when he bought a nearly 10 percent stake in the company in 2008.

Copyright AFP (Agence France-Presse), 2011