(Adds details on new investment in paragraphs 8-10)
HONG KONG, Aug 19 (Reuters) - BYD Corp , one of China's top makers of batteries for cellphones and laptop computers, said on Tuesday its first-half profit rose by 27 percent, as revenue soared on strong demand from mobile phone makers.
BYD, whose customers include handset giants Nokia , Motorola and Ericsson , posted a net profit of 325 million yuan (US$39.3 million) for the first half of 2003 through June, compared with 256 million yuan a year ago.
The figure was at the low end of estimates provided by seven analysts polled by Reuters, who had forecast an average net profit of 340 million yuan.
Revenue jumped by 56 percent to 1.49 billion yuan from 950 million yuan a year earlier.
BYD's share price is up about 25 percent in the year to date -- about twice the gains for the broader, blue-chip Hang Seng Index -- on investor optimism about the company's prospects in China's growing telecoms and computer markets.
The stock closed up 2.34 percent at HK$19.65 before the results were announced.
Despite the strong growth, analysts have expressed reservations about BYD's recent move into the car business with its 270 million yuan purchase this year of a majority stake in a Chinese compact car factory.
Wang said BYD will invest another 200 million yuan in the venture in the second half of this year to build a new production line to make higher end cars that will eventually sell for about 100,000 yuan each.
Automakers, led by foreign giants, are investing billions of dollars to expand production in China, fueling concerns about overcapacity.
Wang said BYD expects to invest about two billion yuan in the new production line over the next 10 years, and considers the project a major engine for his company's future growth.
Analysts were particularly concerned about erosion of BYD's profit margins, since such margins are typically lower for car production than for batteries.
That concern was played out in BYD's first half, as gross profit margins dropped to 35 percent from 42 percent a year earlier and net profit margins fell to 22 percent from 27 percent.
President Wang Chuanfu said he expects continued growth through the rest of the year. He added that BYD plans to build a new plant in Beijing to better serve its clients in northern China.
"We are looking forward to a quite strong second half and believe that our yearly targets of 2003 will be achieved," he said in a statement.