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An Investor’s Quick Overview of How BYD Makes Its Money

BYD Co Limited (SEHK: 1211) is a conglomerate with interests in various businesses such as automobiles, batteries and more.

The company is also well-known due to the backing of Warren Buffet and Charlie Munger. In this article, we will try to understand one aspect of the company – how does it make its money? This will help investors get a quick overview of the company’s various sources of income.

Here, I’ll look at it from two perspectives – by product categories and locations. Let’s see the charts below.

 Source: BYD 2018 Annual Report

Overall, we can see that BYD operates in three product categories – automobiles and related products, rechargeable battery and photovoltaic, and handset and assembly services.

The biggest segment, automobile and related products, manufactures and sells automobiles and auto-related moulds and components, automobiles leasing and after-sales service, and also includes its “Skyrail” related business (Skyrail is mainly related to BYD’s new monorail business).

The second-largest segment, handset and assembly services, provides mobile handset components such as housings, keypads, as well as providing assembly services to customers.

The final product category produces various type of batteries such as lithium-ion batteries and nickel batteries, photovoltaic products and iron batteries products (including energy storage stations and iron battery pack). These batteries are used mainly in mobile phones, electric tools, energy storage products, electric vehicles and more.

Geography-wise, the bulk of BYD’s income is derived from customers in China (87%), Asia Pacific (7%) and the US (2%). In other words, at least 94% of BYD’s revenue is generated in the Asia region. As such, investors should be comfortable with such a concentration of income when investing in the company.

Key takeaway 

In all, BYD is not a straightforward company to understand due to the diversity of its product range. Thus, I hope the above explanation will give investors a quick overview of the company’s income, and in turn, help investors better understand BYD’s business and its long term prospects.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Lawrence Nga doesn’t own shares in any companies mentioned.