Take into account BYD’s hidden debt and its gearing rises from 74% to 122%. This raises the possibility of further capital increases in light of substantial cash outflows and deteriorating profitability due to fast declining subsidies. These purchase subsidies doubled in FY16, contributing over 40% of BYD’s revenue from electric vehicles, which led to a near 80% rise in profits. However, subsidies will be gone in three years. The company is already feeling the impact; analysts have reduced FY17 profit expectations by almost 20% so far this year. Add into the mix the company’s expensive valuation and a propensity to manipulate profits.