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The little prince

The little prince
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  • New 2014 low for 10-year Treasury yield [View news story]
    I totally agree with you Great. Interesting to see that the consensus has been expecting an increase of inflation since 2009 in most of the developed markets. In fact, we are now seeing more the opposite : more deflation pressure. Why ? Because there is no much wage growth in most of developed economies (globalization effect probably). Credit growth risks also to slowdown as property market is now decelerating in several developed countries.
    So, the trend for long term rates (decrease in developed countries) is probably just a reflection of what's happening to inflation expectations.
    May 29 03:53 AM | Likes Like |Link to Comment
  • Kandi Technologies: The Latest Bubble Stock? [View article]
    Hello Christopher, I saw that you did a similar recommendation on Arotech (ARTX) at the beginning of march...and you were right.
    But honestly, this is a different story, as KNDI is an EV company (as mentioned by a lot of people) and you had also some major news, with their Q4 results (largely commented here).
    We also know the risks, clearly mentioned in their 10-K.
    So, the main question seems to be the upside potential.
    There are still a lot of unknown, given the limited disclosure regarding the company's business model, in particular for their EV sharing business.
    However, we begin to have a better idea of their earnings potential thanks to their Q4 results.
    Given their previous results, we may assume that their other businesses are not generating much profit, so a large part of their Q4 net results (4.6 m on a non gaap basis) probably come from their EV sharing business in Hangzhou. It is also interesting to note that their q4 results were affected by a JV loss of 2.3 m. According to their 10K, the JV would have been profitable if the company had received the government subsidies for vehicles sold in 2013.
    So, we can assume that their earning potential was 6.9 m during Q4 2013, if we match the government subsidies with the JV result.
    If we annualize this result and estimate that the company is able to develop successfully their EV sharing business in 5 cities ("the company is in discussion to expand EV sharing business in 4 cities"), Kandi has an earning potential of 138 m. If we put a PE of 10 on such a result, we get a potential market cap of 1,380 m, which still gives an upside potential of more than 70 % for the stock.
    This remains a cautious approach as you can guess that their business is not yet mature in Hangzhou (just launched in H2 2013) and they can expand this model in probably more cities in China, while my forecast does not include any profit for their JV with Geely.
    Mar 19 12:12 AM | 2 Likes Like |Link to Comment
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