Paninaro wrote:Hi Muhajir,
I've been in and out of Geely for the last two years and discussed the stock and the company at a German forum. First here
http://www.wallstreet-online.de/diskuss ... er-gemerkt (over 2000 pages)
When the stock kept underperforming, nerves were laid bare and fights between a few members started, a new thread had to be opened a couple of months ago:
http://www.wallstreet-online.de/diskuss ... er-bemerkt
I'm currently slightly bearish on Geely. I'm the only member of that German forum who actually lives in China and probably the most bearish over there.
Paninaro wrote:First of all, I hardly know any Mainland Chinese who would actually fancy buying a Chinese brand car. Also, Geely is one of the very few manufacturers who doesn't have a foreign joint-venture partner.
JV's here usually work like this. Foreign companies, blinded by the prospects of a billion potential costumers, agree to terms unimaginable anywhere else. They bring technology which took them a fortune and decades to develop, they invest tons of money and pay for everything at least double of what a local company would pay (land cost, construction costs, production costs, labour, taxes, etc...).
The local partner, may it be Brilliance or SAIC just sits back and makes money, a lot of money.
Geely, on the other hand, actually spent money to acquire Volvo. Volvo is owned by parent Geely Holding, not Geely Automobile. The shareholder of Geely Automobile is used as cash cow. The number of oustanding shares increases by several million EVERY week, it's also rumoured that some of the production capacity will now be used to produce Volvo, not Geely.
Paninaro wrote:Another issue is the increasing challenging car market in China. VW, Ford and a couple of other producers plan to break into the lower/ lower middle segment where Geely is making money. And rival BYD started a price war just a few months ago. Lower profit margins and in the best case only small increases in sales = less profit.
However, on the upside, there are two good things about Geely: 1st: the stock is already near it's 12 month low and has fallen more than 40% since its autumn highs and 2nd: the company made this statement:
Muhajir wrote:-Vested
Went in today at $ 2.88.
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