SHARES in Shenzhen-based electric vehicle maker BYD Co., backed by U.S. investor Warren Buffett, rebounded more than 15 percent in Hong Kong trading Friday, reversing some of the previous day’s steep losses after the firm said its business fundamentals were sound.

    BYD’s Hong Kong-listed shares fell 29 percent Thursday in record trading, their biggest one-day drop, in an unexplained slide that wiped out around US$1.2 billion of its market capitalization.

    On Friday, BYD shares in Hong Kong closed up 14.17 percent at HK$28.60 (US$3.69) after hitting an intraday high of HK$30.60. Its Shenzhen-listed shares were up 2.84 percent.

    The company, which is 9.1 percent owned by Buffett’s Berkshire Hathaway Energy Holdings Co., said in a statement late Thursday that it sees no sign of Buffett reducing his stake in the foreseeable future.

    It also said its orders and output of electric cars remain good, and its exposure to economic problems unfolding in Russia was insignificant.

    “With the company saying fundamentals are unchanged, the only way to understand yesterday’s slump is that certain big investors incurred margin calls and that triggered panic selling,” said Gao Xiang, an analyst at Southwest Securities Co., Friday.

    Analysts said despite the recovery Friday, BYD shares were likely to head lower over the medium term.

    “You look at the growth of its earnings, the valuation is not justified,” said Ben Kwong, head of research and director of KGI Asia in Hong Kong.

    BYD shares in Hong Kong are traded at around 126 times the previous 12 months’ earnings, much higher than the average price-earnings ratio of 11.2 times for peers.

    Despite a surge in BYD’s electric vehicle sales this year on the back of government incentives, the company said in October that its 2014 net profit may fall up to 22 percent due to sluggish sales of gasoline-driven cars.

    BYD’s auto business has struggled this year, with overall volumes down 16 percent, led by a plunge in conventional vehicles amid increased competition in its home market.

    Song Yang, an analyst at Barclays, maintained a cautious view on the stock following Thursday’s selloff. “Given BYD’s still-high valuation post correction and uncertainty over the Chinese Government’s policy direction regarding electric buses, we do not expect any sharp recovery in the share price,” Song said. (SD-Agencies)