- Target price: hk$10, now hk$6.9
- Business and its moat
GWM is a leading SUV manufacturer，whose main market is in China, taking about 10% of SUV market. The top model is H6, which was sold 56k in Oct. and about 430k totally til Oct. this year, growing at 48%. But the total viechle sold til Oct. is 794k (667k last year) growing at 19%.
Large scale production of Good Value-price products
Founder Jianjun Wei, who holds 56% of the shares. In his early days, he successful developed and marketing UTE and Haval SUV, and had several failed cases.
- Earning capability: From 2011-2015; Net income:3b to 8b; Cash from op: 4b to 10b； sales from 30b to 76b； Net Profit margin is 10%+， which is very healthy； Besides, no share diluted.
Depreciation 1.97b （1.67b in 2015）
Cap Exp: 5.8B (7.22B in 2015)
It may be acceptable considering the fast growing business.
- P/E： 6.1, (toyota is 9.2; Geely is 22)
- Valuable Assets
In FR 2015, The equity was 71.9b; total liability was 33.5b. among liability, there were 31.7b is current liability, which include a/p 21b, and prepaid 4.9b, salary and tax payable about 2.5b.
- Almost no debt.
- Dividends: Usually 30% pay out
So, the dividend in 2015 is 0.27 rmb = 0.336 hk$. Dividend yield about 4.8%.
- Competitors: Car manufacturers. Geely, Dongfeng motor, BYD, changan motor
- Industry and environment
Government may cancel the tax cut policy for new car purchasing in the end of the year.
- Weak and risk:
Focus too much on SUV.
Arguably solo successful product.
The SUV market will be increasly competitive.
Disclosure: I am/we are long HKG:2333.