[Click eStock] "BYD Announces $5.6 Billion Capital Increase Plan... Global Business Expansion"

NH Investment & Securities evaluated BYD, a Chinese electric vehicle company, on the 5th, stating that "with the announcement of the paid-in capital increase plan, an enhancement in technological competitiveness and strengthening of global market influence are expected."

On the same day, Choeolgun Jo, a researcher at NH Investment & Securities, said, "The day before, BYD announced a paid-in capital increase plan for approximately $5.6 billion worth of H shares (shares of Chinese companies listed on the Hong Kong Stock Exchange)."

The issuance price for the paid-in capital increase was set at HKD 335.2 per share, which is 11.8% lower than the average closing price of HKD 380.1 over the previous 10 trading days, and a 7.8% discount compared to the closing price on the previous trading day (the 3rd). The number of shares issued is about 130 million, which is approximately 11.8% of the existing issued H shares.

The funds raised through this paid-in capital increase are planned to be used for research and development and global business expansion. Researcher Jo explained, "The paid-in capital increase includes many globally renowned institutions such as sovereign wealth funds. Among them, a strategic partnership was also established with Al-Futtaim, a family business from the United Arab Emirates, to strengthen influence in the Middle East region."

Following the announcement of the paid-in capital increase plan, BYD's stock price fell by 6.8% and 4.3% in the Hong Kong and mainland stock markets, respectively, on the following day. Researcher Jo said, "Since the stock price had surged due to positive news related to the autonomous driving system announcement on the 6th of last month, the increase in profit-taking sales likely had a significant impact."

He added, "BYD has already secured a solid competitive advantage in the Chinese domestic market, and as its global market competitiveness is expected to further strengthen, the short-term stock price adjustment will be an opportunity for bargain buying."

Meanwhile, BYD announced its latest autonomous driving system on the 10th of last month, and on the 2nd, jointly launched the world's first vehicle-integrated unmanned aerial system (UAS) with DJI, a leading Chinese drone company. Researcher Jo stated, "BYD, which has secured unparalleled cost competitiveness, is expected to further strengthen its relative product competitiveness by equipping autonomous driving systems across all vehicle models."