There are some risks associated with Chinese companies;
- there have been a large number of frauds of Chinese firms in US
- legal proceedings in China are pretty much futile,
- There are also problems transferring cash abroad. If a company cannot transfer any cash to the United States, the stock may be worthless.
- There have also been efforts to remove such companies from the US market altogether. I think that inspections of the auditor in China are still not possible by US authorities.
- VIE structures and high cash balances without substantial dividends are red flags.
What nonsense. It would be like saying not to invest in EM because of political risk. This is all already priced in. The Chinese market will move a lot further.
Frauds are common in China (maybe 6-7% of the companies) but not in other EM (maybe 1%). None of the small Chinese companies that were listed in Germany (primary listing), for example, survived. BTW I am invested in the Chinese stock DSWL which did really do very well (+ about 100%). But this company pays out large dividends. I would invest in large Chinese companies and those that pay high dividends. These should be safe.
That does indeed appear to be significantly undervalued. However, there are many similar companies in Hong Kong that are extremely cheap. Confidence in China is evidently very low.
I can also give you some names with a P/E below or around 5 and a low P/B. e.g. 98, 184, 280, 380, 882, 1420, 1433, 1982, 2356 and many more. Just look at the MSCI China H index which trades at a P/E of about 8 / P/B of 0.85. However, some brokers blocked trading in very small Chinese stocks.
thanks so much for bringing up this interesting idea.
A little research with gemini suggests, that the lock up period for this IPO ends after 180 days (8th of december). Do you think there is a chance they gonne try to monetize their stake? And do you know if there are any other private equity investments (under long term investments) or is Insta360 the only one? Their AR 2024 doesn´t say anything about it......
I hope they try to monetize their stake but I have no idea if they are or not. Chinese companies are kind of black boxes. I think this is their only PE investment but not 100% sure.
There are some risks associated with Chinese companies;
- there have been a large number of frauds of Chinese firms in US
- legal proceedings in China are pretty much futile,
- There are also problems transferring cash abroad. If a company cannot transfer any cash to the United States, the stock may be worthless.
- There have also been efforts to remove such companies from the US market altogether. I think that inspections of the auditor in China are still not possible by US authorities.
- VIE structures and high cash balances without substantial dividends are red flags.
What nonsense. It would be like saying not to invest in EM because of political risk. This is all already priced in. The Chinese market will move a lot further.
Yes, but I would buy Chinese stocks in Hong Kong and not in US. See also here:
https://www.gmtresearch.com/en/research/faking-cash-flows/
Frauds are common in China (maybe 6-7% of the companies) but not in other EM (maybe 1%). None of the small Chinese companies that were listed in Germany (primary listing), for example, survived. BTW I am invested in the Chinese stock DSWL which did really do very well (+ about 100%). But this company pays out large dividends. I would invest in large Chinese companies and those that pay high dividends. These should be safe.
That does indeed appear to be significantly undervalued. However, there are many similar companies in Hong Kong that are extremely cheap. Confidence in China is evidently very low.
What other companies in China do you know that are trading like this? Looking for more ideas in that region to research.
In U.S. see also GTEC with a P/E of 2 and price to book of 0.3. I think this is an interesting stock. However, the company never paid any dividends.
e.g. https://jaminvest.substack.com/ covers such stocks,
I can also give you some names with a P/E below or around 5 and a low P/B. e.g. 98, 184, 280, 380, 882, 1420, 1433, 1982, 2356 and many more. Just look at the MSCI China H index which trades at a P/E of about 8 / P/B of 0.85. However, some brokers blocked trading in very small Chinese stocks.
https://www.msci.com/documents/10199/e66bf075-4775-470c-a7ab-2e9defe09332
Good morning value road,
thanks so much for bringing up this interesting idea.
A little research with gemini suggests, that the lock up period for this IPO ends after 180 days (8th of december). Do you think there is a chance they gonne try to monetize their stake? And do you know if there are any other private equity investments (under long term investments) or is Insta360 the only one? Their AR 2024 doesn´t say anything about it......
I hope they try to monetize their stake but I have no idea if they are or not. Chinese companies are kind of black boxes. I think this is their only PE investment but not 100% sure.