AutoChina: A Growth Stock in a Growing Sector

AutoChina International Limited (AUTC) is China’s largest one-stop commercial vehicle sales, leasing, and support network. The company owns and operates 178 commercial vehicle financing centers in Northern China regions, and primarily provides sales-type leasing and support for local customers. AutoChina International also presents after-sales support, road-side assistance, and value-added services. And on top of all that, they offer additional value-added services including insurance, tires and diesel fuel.
AUTC is selling the picks and axes, rather than having to dig for gold themselves. They lease the trucks that build the foundation for Chinese businesses and allow them to function properly. They sell to business with hopes that the businesses will grow due to their services.
AUTC has a low P/E ratio and recently completed a secondary offering of 2 million shares at $35. Right now they’re down at around $30.70, which means you’re buying it at $4 a share cheaper than the people who recently bought $70 million worth of shares. They also have very high insider ownership. It was announced that there was a $500,000 recent share purchase made by CFO Jason Wang. We know this because, in keeping with the Company’s policy of clearness to its shareholders, the Company has determined that it will announce all open market transactions (purchases or sales) exceeding $250,000 effected by its officers and directors.
China’s largest commercial vehicle leasing network announced that the company leased 2,505 commercial vehicles in the first quarter of 2010. This proves how fast their success is growing given that they leased only 251 commercial vehicles back in their first quarter of 2009. Since their initial launch of commercial sales and leasing business in March of 2008, AUTC has leased over 11,000 trucks. The Company expects to lease over 12,000 commercial vehicles during 2010 and operate at least 275 stores in total by the end of the year.
According to the China Economic information Service, sales of heavy-duty trucks, like the units that AutoChina leases, has increased 140.1% year-over-year in February 2010 to 71,000 units. The demand for the trucks is increasing due to a larger scale commercial construction and local infrastructure projects being initiated. This information highlights the fact that AutoChina International Limited is doing well in a growing sector and should continue to deliver grow. That is why we bought this stock.
Disclosure: Own some AUTC

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Tagged: , Auto Dealerships, China
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