​​​MEMORANDUM

 

From: Julian Williamson, Emerging Markets Analyst

To: Clark Hansen, CEO

Subject: BYD Co Ltd: China’s Green Solution?

Date: July 15th, 2013

 

I have an upbeat investment opportunity for Anima Mundi Development Partners. I highly recommend BYD Co Ltd, established in 1995. BYD Co Ltd or “Build Your Dreams” started as a major manufacturer of rechargeable batteries for cells phones in China, but has now entered the electric automobile market by utilizing its many subsidiaries. I believe that within the automobile industry BYD CO Ltd, backed by the investment genius Warren Buffett, is able to fully flex it’s muscular might.

 

BYD Co Ltd is a Triple Bottom Line Company

• Profit – A company that provides more income than it does costs in a responsible and honest manner.

• People – A company that acts responsibly with regards to the treatment and respect of its customers, employees, and business partners.

• Planet – A company that takes responsibility regarding how the company effects the present and future of the environment directly and indirectly (“Buffett’s BYD Profit Up”).

 

After extensive research, I have analyzed that BYD Co Ltd is worth the investment despite the company’s age. Here are several reasons why BYD Co Ltd has the potential to provide profitable returns:

• BYD Co Ltd, based in Shenzhen, China has now not only expanded to additional major cities in China but also has established its foot in the United States.

• BYD Co Ltd has signed a 50/50 joint venture agreement with Daimler AG (Mercedes-Benz) to develop electric cars in China.

• BYD for the first quarter of 2013 announced that, “earnings tripled from the third quarter of 2012, on the release of new automobile models” (“Buffet’s BYD Profit Up”). The company’s net profit increased to 112 million yuan for the January-to-March quarter, up from 27 yuan the year before.​

 

This company is in the early stages of its growth which therefore provides an incredibly profitable opportunity. I believe the electric vehicle market in the United States is only now receiving attention. However, in China and much of Asia, the electric vehicle market is still embryotic. The opportunity to get in on an investment with the premier company in an early growth market provides many advantages. The advantages are not only expressed in capital and profitable gains, but also in fulfilling the remaining triple bottom line factors.

 

BYD Co Ltd’s Corporate Social Responsibility as a Social Enterprise

Social enterprises are companies that value the common good. These companies use business theories and the marketplace to promote positive social and environmental agendas.

 

BYD Co Ltd believes in not only creating a strong profitable company that creates a “green environment through technological innovation, but also established BYD Charity Foundation in 2010, the platform to build a better society” (BYD).

• The charity foundation has provided donations to educational programs at secondary schools and universities as well as helped the poor in Tibet by providing electricity to villages.

• In addition to the educating and providing energy to the poor, BYD has donated vast amounts to those impacted by the Sichuan earthquake. BYD Co Ltd donated RMB 20 million (approximately USD $3.25 million), 1000 quilts, and 1000 sets of cotton clothes to disaster-hit areas in Qinghai Yushu (BYD).

• BYD created an organization to provide and help abandoned children in various parts of China. The BYD Children Welfare Institution has an initial investment of RMB 40 million to provide food and shelter for orphans in Shenzhen (BYD).

 

BYD, the Forefront of the Zero-emissions Initiative

Carbon footprint is defined as a measure of the amount of carbon dioxide produced by a person, organization, or location at a given time. Carbon dioxide contributes largely to the greenhouse gases that are impacting global warming as well as proliferating other negative consequences on our environment. The Prime Minister and other officials of the country of Aruba have signed a memorandum of understanding (MOU) with BYD Co Ltd. The memorandum provides the logistics to establishing Aruba as the first Nation with a completely zero-carbon footprint and energy independence by the year 2020 (Reuters). This MOU between Aruba and BYD Co Ltd is possibly one of many zero-emission stories to come in the fight for the environment.

 

Final Thoughts

BYD Co Ltd is not only an aggressive contender in the electric vehicle market but also the company pushes the envelope with regards to creating a zero-emission planet. Arguably, “like Facebook before it went public, BYD is a young company riding a wave of tremendous hype” (Dunne). As Facebook transformed and became the solution to the need for social networking, BYD Co Ltd is possibly the green solution the environment has been waiting for. The majority of the public missed out on investing in Facebook early; however, the few that did made once in a lifetime returns. Buying in BYD Co Ltd early is an opportunity not to be missed. I highly recommend BYD Co Ltd.

 

 

Works Cited

“Aruba Partners with BYD in Zero-Emissions Initiative, Energy Independence by 2020.” Reuters. Reuters News, 11 Jun. 2013. Web.

 

"Buffett's BYD Profit Up to 200% as First Quarter 2013 Profit Triples." Forbes. Forbes Magazine, 26 Apr. 2013. Web.

 

"BYD: Electric Vehicles, Photovoltaic, LED Lighting, Energy Storage." BYD: Electric Vehicles, Photovoltaic, LED Lighting, Energy Storage. Web.

 

Dunne, Michael. "Bet on BYD? Revisiting China’s Most Hyped Automaker." China Real Time Report RSS. Wall Street Journal, Web.