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Arthur Porcari  

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  • 5 Reasons Why Kandi's Risk Is Much Higher Than You Think [View article]
    Jonathan, your main argument is that ZZY who works exclusively with the JV in all ten cities can't make a profit from the CarShare program. You have been contradicted throughout the comments here with logic by readers. Since Logic doesn't seem to be enough to convince you, what do you make of this ZZY Job Search posting put up this week trying to fill 78 positions in just the City of Hangzhou alone:
    Apr 22, 2015. 04:13 PM | 5 Likes Like |Link to Comment
  • Was Kandi's Latest Investor Presentation An April Fools' Joke? [View article]
    In 2009 the stock could have been bought just over a dollar a share. If you still own it from that time, like I do, you have nothing to complain about.

    But aside from that, It wasn't me that predicted 150 a share in 5 years in 2009.
    Apr 16, 2015. 07:38 PM | 3 Likes Like |Link to Comment
  • Was Kandi's Latest Investor Presentation An April Fools' Joke? [View article]
    Bad Sailor, You got the wrong annual meeting transcript. The link you gave was for the 2013 meeting. Geely's Shufu nixed the Shandong deal right after the JV was announced.

    Here is the link to the 2014 Annual meeting

    Q: Questions about production capacity on existing and two new facilities

    A: At present, Changxing and Shanghai’s designed annual facility capacity is 100k units, respectively. Jinhua’s designed annual facility capacity is 30k units. Rugao and Wanning facilities will each achieve 100k annually once the constructions are complete. We endeavor to have the two new facilities completed and commence the operation in 2015.
    Apr 16, 2015. 07:32 PM | 1 Like Like |Link to Comment
  • Was Kandi's Latest Investor Presentation An April Fools' Joke? [View article]
    The concluded SEC investigation had little if anything to do with a bogus antiquated strock promotion matter. If you took the time to research the issue, you would have noted that when KNDI voluntarily disclosed the subpoena, they said it was titled " In the Matter of Kandi Technologies Group, Inc". and it came out over a year after the stock promoter matter which was primarily having to do with other China stocks and was titled with the Promoters names.

    Even you don't honestly believe that the SEC would take 14 months to investigate one reported possible instance accusing the company in maybe giving some 350000 shares of a 1.25 stock to bring in new investors.

    The KNDI Investigation was 90% Financial Reporting and Disclosure and had nothing to do with stock promoters. It was initiated by troubled short sellers who using a time tested technique of covering the Commission up with every possible rumor an innuendo in hopes that some wrongdoing might be uncovered and have the SEC sanction or halt the stock. I must admit that even I thought they would find something out of place since very few Companies, particularly foreign, might have erred at least in translation. But that was not the case. The SEC surprisingly found nothing actionable in spite of spending a lot of taxpayer money.
    Apr 16, 2015. 07:23 PM | 4 Likes Like |Link to Comment
  • Was Kandi's Latest Investor Presentation An April Fools' Joke? [View article]
    Jon, You noticed that "2 year" completion deadline as well :-) I have a strong feeling, Hu will get it done.

    Based on your extensive knowledge of China, I am sure you are aware that tying down Hainan Province would be a big win. As the "Hawaii of China", the whole Province, while small in size, is seriously considering mandatory measures to convert all auto traffic in the whole Province to EV exclusively. Considering it is also the preferred vacation destination of the China hierarchy, both private and Government, it would be a great branding location.
    Apr 16, 2015. 07:01 PM | 2 Likes Like |Link to Comment
  • Was Kandi's Latest Investor Presentation An April Fools' Joke? [View article]
    II- Sorry, I didn't think I would have had to copy and paste the whole JV agreement. If you would have taken a minute to open the link, you would have seen the below on the next section. Initially both sides only had to put up 20% with the balance within two years. However, as it turned out, a third was put up on closing and the balance before YE 2013 to pay for the respective plants

    5.3.3 Contribution Schedule

    (1) The First Payment

    The Parties shall contribute in cash at 20% of the registered capital of the JV company on their first contribution.

    (2) The Second Payment

    The Parties shall make the remaining contribution to according to the resolution by the shareholder meeting of the JV company. However, such contribution shall be completed within 2 years from the date of establishment of the JV company.
    Apr 16, 2015. 05:38 PM | 2 Likes Like |Link to Comment
  • Was Kandi's Latest Investor Presentation An April Fools' Joke? [View article]
    Jon, I agree it does need further clarification and I assume it will be cleared up with specifics no later than the upcoming 10Q. But reading between the lines of the filings, we know that the original cost of the Wanning Facility was somewhere around $170-180 million. So since KNDI now only owes around $106 million to complete, I assume the $59 million advanced was paid which decreased KNDI future liability on the new facility.

    Was it a mistake that they may have over-committed to production so early? Well hind-sight is great, but as I responded above, at that time the deal was negotiated (Nov 2012) which preceded the final contract signing, by five months, here was the reported terms extracted from a Company PR at that time of the Nov 2012 LOI;

    "Having conducted months of thorough due diligence and rounds of negotiation since Kandi Technologies was invited to Hainan by both provincial and city governments, the Company has reached this Framework Agreement with Wanning City. Some of the main contents of the Agreement include the following:

    A. The Hainan manufacturing facility will be built by Kandi. When fully completed and reaching its ultimate production capacity, the facility is expected to generate up to RMB 3 billion of annual revenue;

    B. The Wanning City will list this Kandi project as a top priority and apply for various preferential policy supports from the province government in Hainan;

    C. The Wanning City will provide Kandi up to 500 mu (or about 82 acres) of land at a favorable price to build the manufacturing plant;

    D. Upon the initial investment by Kandi, Wanning City will work actively to gain national, provincial and municipal supportive policies for the EV industry, and will fully promote the use and acceptance of Kandi EVs as well as its business model in Hainan province. In principle, the government will have a special subsidy policy for no less than 20,000 EVs every year;

    E. Kandi will receive favorable tax incentives and rebates from Wanning City;

    F. Kandi agrees to complete the construction of the manufacturing base within two years of obtaining the favorable land-use rights."

    Now as you can see, there were some pretty lucrative incentives being given to KNDI to build that plant. But as I mentioned in my comment to you above, at the time this deal was struck, you had to have a manufacturing presence in the locale to be allowed to sell and get local subsidies.

    As you can see from this followup PR on the facility which was done after the JV was initiated though not yet funded, KNDI has an agreement from the JV to buy the plant upon completion. I assume Li Shufu gave his blessing for this. So if the funds were "diverted" for some sinister reason, I would think Shifu would be "up in arms" by now.

    Here is an extract from that second PR;

    "Kandi Wanning anticipates achieving the annual capacity of 100,000 units of EV key components and parts for its first phase (the 'Project') within two years. Upon the completion of the Project, Kandi Wanning will be transferred to and become a wholly owned subsidiary of Zhejiang Kandi Electric Vehicles Co., Ltd., the joint venture company that will be established by Kandi and Geely Auto.

    But also, take into consideration, the SEC Investigation was in full swing when KNDI made that payment. And contrary to what those without knowledge might try to fabricate, the KNDI SEC investigation was into KNDI and its financials (not some antiquated stock promoter problem) initiated by reams of dis-information piled on the Commission. I believe you know how that works :-)

    Will they ultimately finish and use the plant? I am not sure even Mr. Hu knows at this time, but one thing about China, when a Company "hits its groove" it doesn't take long to get big. Take KNDI's partner Geely. It made its first car in 1998, nine years later it was making over 500,000 cars a year.

    So if I was a betting man, I would say yes. But if they decide not to, I am sure they could sell what they have for at least as much if not more than what they have in it. EV plants are a hot item in China right now.

    But I repeat from my prior post. If they don't, or if they decide to just mothball it for a year or so, it can only help, not hurt their bottom line during that time. If they complete it and sell it to the JV, it might hurt JV net, but that will be shared with Geely. As you know, it is much cheaper to mothball a plant in China for a year or so, then in the US.
    Apr 16, 2015. 03:04 PM | 1 Like Like |Link to Comment
  • Was Kandi's Latest Investor Presentation An April Fools' Joke? [View article]
    To save time, let me regurgitate a similar answer I posted to a similar question from my last SA article. For starters though the number of batteries sold and revenues are correct, the 83% number is incorrect for the following reasons.

    "If you look at page 9 of the 10K you will see KNDI's total sales of EV "parts and products" for 2014 was around $151 million. On page 36 you will see that the JV had total sales of $215 million. So KNDI the public company generated its own revenues right at 70% of the final sales price of the EV's. Right where I guessed on my last article two weeks ago.

    The 6,5,4 and 2% numbers you reported were in fact posted on the 10K for parts other than the battery which was posted at 83%. But these numbers are conservatively misleading.

    KNDI also sells to the JV with their own Battery Management System (Just like TSLA buys batteries from Panasonic, but them assembles them into its own BMS). The problem with the 10K is this section that you speak of.

    If you notice the table in that section in addition to the "parts", you will also see a category called "Products". KNDI changed its policy of sales sometime in Q3 as I also mentioned in my last article. Up until that a point, the parts were not broken out, but included in what they called "product" which is a 95% completed car kit. However the battery without BMS, which they did classify as a "part" was not isolated to the later part of the year, but for the whole year.

    When they ran the calculation for the parts breakout in the 10K, they DID include the Battery plus the other parts for the whole year, but DID NOT break-out the various parts attributable to the 3700 "products" or car kits for the first seven months.

    Had they done that, I believe you would have seen the percentage of batteries listed under "parts" reduced to somewhere around 60% and the rest of the parts making up the balance. I know this is confusing, but in fact accurate.

    So to continue, KNDI does get to book the parts sales, but to stay competitive, it must cut its margin on these sales, but as I mentioned in the article, the reduced Gross Margin is more than made up for by KNDI being able to book half the JV profits.

    Hope this answers your question
    Apr 16, 2015. 02:25 PM | 3 Likes Like |Link to Comment
  • Was Kandi's Latest Investor Presentation An April Fools' Joke? [View article]
    II- I sorry. I was not aware you had a copy of the daily bank ledger on the JV. Could you please post it here.

    I only ask that because that is the only way you would know they only had $37 million in cash going back to 2013. All us less blessed have access to is the quarter end snapshot in the condensed unaudited Income Statement that KNDI provides in their quarterly reports. For all I know there could have been a hundred million put in and out of the account dozens of times during the 90 days between reports.
    Apr 16, 2015. 02:20 PM | 3 Likes Like |Link to Comment
  • Was Kandi's Latest Investor Presentation An April Fools' Joke? [View article]
    II- So what is it you find sinister about KNDI not being a battery manufacturer, one of the most competitive areas of EV in China? As a KNDI shareholder, that is the last business I would want to see KNDI enter. At least not without a partner to run that business.

    Just like TSLA buys its raw batteries from Panasonic, however KNDI has gone one step further in assuring a constant supply of batteries by having announced agreements with five of the top ten EV manufacturers in China. Tianning Power, Wanxiang, Lishen, Air Litium (CALB) and Sinopoly.

    Also like TSLA beginning in Q4 2014, KNDI has added value to its battery profits by building the Battery Management Systems from the raw batteries, just like TSLA currently does.
    Apr 16, 2015. 01:31 PM | 4 Likes Like |Link to Comment
  • Was Kandi's Latest Investor Presentation An April Fools' Joke? [View article]
    II- The plants were each valued around the same price, around $180 million or so. Since each contributed a plant, aside from the cash put up by each, the balance would basically be a "wash". Geely would have had to pay for half of Changxing and KNDI half of Shanghai Maple.
    Apr 16, 2015. 01:12 PM | 5 Likes Like |Link to Comment
  • Was Kandi's Latest Investor Presentation An April Fools' Joke? [View article]
    PV, that picture was taken by a passer by on the highway near the JV Shanghai plant.

    You are correct in that the JV does not book a sale until the car is registered in the final users name. You are wrong about it taking six months. According to the company, the time frame is measured in days, certainly not Months. But obviously, KNDI has already provided the Parts and likely been paid the parts sales portion of those cars.

    What is amazing about all of the contributors who seem to be frustrated looking for some malfeasance that KNDI is bring to the JV, seem to forget that KNDI only owns 50% of the JV, Geely. Geely, a Company whose stock has soared 85% to an all time high even after reporting a bad 2014 and has a dozen Analysts from Goldman Sachs on down with buy opinions, just since last December, would have to be equally complicit in any wayward scheme.
    Apr 16, 2015. 12:58 PM | 5 Likes Like |Link to Comment
  • Was Kandi's Latest Investor Presentation An April Fools' Joke? [View article]
    Bad Sailor, Read the JV agreement I posted above. Both Companies put up $80 million in cash, then each company sold a plant to the JV.(which were at least partially paid for by the JV with the cash infused) This compared to the DaYang deal which did not require Geely to put any cash, only their shuttered manufacturing facility to earn their 50% interest. Big Difference.

    In case anyone cares, Sailbad has a notorious reputation for only bashing stocks, initially on Yahoo chat, going back at least ten years. He has been bashing KNDI since the stock was trading below $1 in 2008.
    Apr 16, 2015. 12:45 PM | 6 Likes Like |Link to Comment
  • Was Kandi's Latest Investor Presentation An April Fools' Joke? [View article]
    II- As you have been preaching in comments and I have been answering you on every article, when Hu was asked how the balance of $106 million was going to be paid, Hu's answer was; "While we haven't exercised it yet, we have standby banking facilities available to pay for the project."

    Considering that KNDI has zero Long Term debt on its books, and after already spending almost $60 million on the Wanning Facility, it should be easily understandable that debt financing would be readily available. Particularly since the JV which is half owned by Cash Rich Geely (who recently raised $300 million in USD debt underwritten by Citi, JP Morgan and Credit Suisse) has a commitment to take out the full cost of the plant upon completion.

    In case anybody want to read anything sinister in the fact that KNDI has taken the responsibility to "complete" the Wanning facility, don't. The reason KNDI is completing the plant is that this deal with Wanning was signed in April of 2013 by KNDI since the JV had not yet been funded at the time.
    Apr 16, 2015. 12:37 PM | 8 Likes Like |Link to Comment
  • Was Kandi's Latest Investor Presentation An April Fools' Joke? [View article]
    Jon, as your friend Mike can attest from his visit to KNDI in 2013, at that time a Company was required to have a manufacturing presence in the Province where they wanted to sell cars. A year ago, after the contracts were in place on the two new facilities, the PRC forced the local governments to "open up" sales to "foreign" manufacturers (foreign also was considered Manufacturers from other provinces.) So now having a "presence" is not anissue as can be seen by KNDI spreading to four new provinces and 8 new Cities, to include Mike's hometown, the last half of 2014.

    I don't disagree, I would also like to know the state of development of the two new plants, but also have logically assumed that with local restrictions lifted, and existing capacity already at 230,000 annually, there is now no legitimate need for Kandi and Geely to be in a hurry to finish either of the new facilities. In fact to do so in any type of hurry would seem to me to not be a wise use of Capital Expenditure the balance of the year.

    Do I think that KNDI and Geely will fulfill their written obligation, yes I do, since Hu expects to be reaching 200,000 annual production by the end of 2017 and 400,000 by 2020.

    So while this discussion might make good fodder for attack writers with an agenda, a delay on building out these facilities will, if anything, have a positive, not a negative affect on both Companies profitability in the near term.


    Hopefully this should provide a logical answer your question, at least in my unofficial opinion.
    Apr 16, 2015. 12:02 PM | 5 Likes Like |Link to Comment