Is BYD (1211.HK) too high now?

BYD (1211.HK) closed on 22 Sep at $70.60, up 50% within 10 trading days. Is it too lofty to go in? What were the push factors in the past 10 days?

BYD boss believed that China will have all electric cars or hybrid electric cars on the road by 2030, a target which is much more ambitious than even the Europe zone's.

But 50% surge within so short a time can lead to a crisis to BYD share prices due to the following reasons:

1. The surge was driven by policy changes, not by compelling consumer demand or growth of the industry or new technology.

2. The crude oil prices are still very low for existing car owners to have the urge to change theirs to electric cars.

3. Too much exuberance in BYD share price which has not been backed by its financial performance. BYD’s half-year earnings actually retreated 24% and it has been estimated that the earnings will drop by 20% for the first 9 months compared to the same period in last FY. Its current p/e (ttm) is 33.79x (based on $70.6 closing price on 22 Sep) and it is almost certain that BYD will have negative growth in this FY. These figures are not compelling for shrewd investors to invest in it at this stage.

If anyone who have bought some BYD earlier, my suggestion is that they can sell it should the price retreat to $68 or/and when the stock opens-high-closes-low.

I tried to compare four China automotive stocks listed on the HK Exchange:

1.      Geely (175.HK): p/e (ttm) at 36.25, dividend yield at 0.51%

2.      BYD (1211): p/e (ttm) at 33.79x, dividend yield at 0.58%

3.      Brilliance (1114.HK): p/e (ttm) at 27.82x, dividend yield at 0.97%

4.      Dongfeng (489.HK): p/e (ttm) at 6.07x, dividend yield at 2.24%

The answer is clear that Dongfeng is my choice at this stage!

Superphang

https://superphang.blogspot.sg/

Get Nice (64.HK) Is Getting Nicer

My wife and I first bought this stock, Get Nice Holdings (64.HK), ion 5^th April 2016 and later added more on 1^st Aug 2017. Our average price was at $0.2748. This stock generally gave 2 cents dividend in a year, and the last declared dividend of 1 cent was xd just last week on 30 Aug 2017, and payable on 13 Sep 2017. We have treated our investment of this stock as our fixed deposit as we have been enjoying a solid dividend yield of 7.28% based on our purchase price. The price movements have been in the doldrums since we purchased it but we do not mind at all as long as the company maintains its low price-earnings ratio and delivers to us about 7% dividend yield a year.

It closed at 31.5 cents today, 4 Sep 2017, up 5%, with volume spike too. This was probably due to the recent rampant purchases by the Chairman and CEO of Get Nice, Mr Hung Hon Man, with the last being the purchase of 4,000,000 shares at 30.5 cents done on 28 Aug which increased his shareholding from 29.28% to 29.33%, which is very close to the 30% threshold for a general offer to be made under the Codes on Takeovers and Mergers.

The codes mandate that the interested party has to make a general offer to the rest of the shareholders with generally a higher bid vis-à-vis his last purchase price from the open market if the party's aggregate shareholdings amount to 30% or more of the voting rights of the company unless otherwise decided by the Securities & Futures Commission of Hong Kong.

Get Nice (64.HK) had some positive price movements lately. Its 72% owned subsidiary, Get Nice Finance (1469.HK) has surged in the past month much more in terms of percentage and its p/e is now 16.3x with the closing price at $1.79. The p/e of Get Nice (64.HK) is only 7.1x, still considered vastly undervalued.

Even if this does not end up a general takeover offer, I will enjoy the ride and the solid dividend yield of 6.35% at the current price, knowing that the CEO is confident of the development of the company.

Superphang
http://superphang.blogspot.sg