$BYD COMPANY (01211.HK)$ The half-year report is out, with total revenue looking good at 90.8 billion yuan. However, the profit is quite disappointing, with only 1.17 billion yuan, a year-on-year decrease of 30%. It's even less than what some celebrities earn from a few movies. Indeed, it’s rather shocking. In Q2 2021, revenue reached 49.893 billion yuan, representing a 22.21% year-on-year increase for the quarter. Net profit for Q2 was 937 million yuan, marking a 39.51% year-on-year decline. According to the announcement, the main reason is the impact of rising raw material prices, such as commodities, reducing the company's overall profitability. The gross margin for the first half dropped from 18% to 11.13%. Can such performance and gross margin justify BYD's market value of 800 billion yuan? It seems very challenging. But if we think this poor performance is entirely negative, wouldn't that be too narrow-minded? $BYD Company Limited (002594.SZ)$ $BYD COMPANY (01211.HK)$ When considering BYD, doesn’t this seem like having too small a perspective?
BYD currently doesn't make much profit from car manufacturing; last year’s profits may have come from masks and other products. The good news now is that its market share has increased. Currently, BYD's new energy vehicles account for over 16% of the domestic market, an increase of 5% compared to the beginning of the year. Cumulative sales in the first half of the year were approximately 155,000 units, a year-on-year increase of 154.76%. In July, sales reached 50,000 units, growing by 234% year-on-year, indicating rapid growth. However, the current problem is that upstream raw material prices have skyrocketed. Recently, materials like lithium carbonate and lithium hydroxide continue to rise and are expected to keep increasing, which might lead to even worse profits for BYD in the second half of the year. Rising commodity prices upstream are having a significant impact on downstream manufacturing. Despite being in an excellent sector with products in high demand, BYD cannot withstand the rising costs of raw materials, leading to revenue growth without profit growth.