Following Geely Automobile (OTCPK:GELYY)
(0175.HK) is an interesting experience, as the volatility gives you a
lot of opportunities to make buy/sell calls. Back in June of 2015, I thought that Geely's shares could approach $12/ADR
as the company started delivering the results of its restructuring and
new product launches. The shares did come close to that level before
year-end - before concerns about sales momentum, subsidies, the health
of the Chinese consumer, and assorted other issues led to a nasty
decline.
From an operational standpoint, I think Geely is in better shape than
the market valuation suggests. At a minimum, I wouldn't overlook the
fact that Geely has shown it can develop new models that are competitive
with foreign/JV models. There are definitely valid concerns here,
including the corporate structure, the heavy influence of government
subsidies, the health of the Chinese economy, and the healthy of the
export business, but the shares seem to more than reflect those
concerns. If you have an elevated appetite for risk, this could be a
name to consider.
While the ADRs do trade from time to time, I would recommend investors consider the far more liquid Hong Kong-listed shares.
Read more here:
Geely Automobile On A Better Road
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