China's battery and electric car maker BYD Co Thursday surged 41 percent on its trading debut on the Shenzhen Stock Exchange despite sluggish vehicle sales and tumbling profits.
Backed by US billionaire Warren Buffett, BYD gained 41 percent to 25.45 yuan (US$3.90) after hitting an intraday high of 26.19 yuan. The benchmark Shanghai Composite Index climbed 1.2 percent and the Shenzhen index gained 1.4 percent.
The price surge came one day after it reported first quarter profit plunged 84 percent year on year to 267 million yuan and sales fell 27 percent to 119,000 units during the same period.
Industry analysts said investors still showed interest because of support from Buffett as well as BYD's leading position in green cars, which are being promoted by the government.
"The industrialization of new-energy vehicles is on track to take off and BYD will be a big beneficiary," Hua'an Securities said.
China may invest 100 billion yuan in the next 10 years on new-energy vehicles and aims to have 5 million units by 2020, according to media reports citing a blueprint that has not been released.
BYD launched the F3DM plug-in hybrid in 2008, the world's first mass-produced plug-in hybrid car. It also produces the E6 electric car and the K9 electric bus.
However, Wang Ren, an analyst from Pingan Securities Co Ltd, said BYD's debut surge was mainly due to its low issue price.
BYD raised 1.42 billion yuan from the share sale, about 33 percent less than it sought in the prospectus.
BYD said it plans to use 1.14 billion yuan from the share sale for R&D and to expand production facilities.
