Goldman Sachs adds BYD to its Conviction Sell list, cuts price target
9/16/2011 Local brands' product strategy in China's car market is central to achieving sustainable profit growth, Goldman Sachs says. 'Given their shrinking market share in the slowing China car market, local brands have to launch more new models quicker.' It cuts target prices by an average 15%. The house says they are taking product strategy practices from international peers, including having more than one model in the same segment and launching different umbrella brands in the same segment. It says SAIC, Great Wall, Geely and Jianghuai are leading local brands on product strategy. It adds SAIC to its Conviction Buy List on its trough valuation. It upgrades Great Wall to Buy from Neutral on strong sedan growth and attractive valuation. It upgrades Geely to Neutral from Sell on recent weakness. It adds BYD Co to its Conviction Sell list and cuts its target to HK$12.57 vs HK$14.04 on the earnings impact from the fuel-efficiency subsidy downsizing and intense entry market segment competition.
A member of our trading/investment group mentioned BYD this week. We like quality stocks to invest/trade, but occasionally, like to speculate on beaten down stocks. The historical low for BYD is 78 cents in 2008. But support should have been at $2 and that is clearly broken. Can anyone please give some input as to where this is headed? TIA