Shares of BYD dropped despite the Chinese electric car and battery maker saying it expects its profit to have soared by as much as 86 percent last year after selling a record number of new energy vehicles.

BYD [SHE: 002594] dropped 2.8 percent to CNY173.49 (USD24.45) a share as of lunch break in Shenzhen today, after earlier falling by as much as 4.5 percent.

Net profit likely soared 74 percent to 86 percent to between CNY29 billion and CNY31 billion (USD4.1 billion and USD4.4 billion) in 2023 from a year earlier, the Shenzhen-based company announced yesterday. However, the average estimate by analysts was CNY31.5 billion, according to Bloomberg.

BYD sold a record number of NEVs last year and overtook Tesla as the world's top electric car seller, it said. Despite intensified industry competition, the significant improvement in profitability was attributed to enhanced brand strength, increased overseas sales, expanded scale advantages, and effective cost-control measures, it added.

BYD sold 3.02 million vehicles last year, up 62 percent from the previous year, it noted. Its export volume skyrocketed 334 percent to 242,800 units, sales of its Dynasty and Ocean brands jumped 55 percent to 2.88 million units, and that of its Denza brand reached 127,800 units. It also began delivering its Yangwang and Fangchengbao brands last November.

According to Bloomberg calculations, despite BYD having record sales in the fourth quarter of last year, its net profit likely shrank to between CNY7.2 billion and CNY9.2 billion (USD1 billion and USD1.3 billion) from CNY10.9 billion a quarter earlier due to making end-of-the-year discounts to hit its annual sales goal.

Regarding its mobile components and assembly business, BYD's capacity utilization has increased and led to improved profitability, benefiting from the increased business share of overseas major clients, the recovery of demand from Android customers, and the rapid growth in the business of NEV and new intelligent products, according to the company.

BYD will likely sell 3.8 million NEVs this year, with an expected export volume of around 500,000 units, according to a research report by Galaxy Securities.

A separate research report by Soochow Securities forecasts that BYD's sales will jump 33 percent to about 4 million units this year from a year earlier and reach 5 million units in 2025, thanks to overseas expansion and the introduction of more new products.