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PR Newswire
24-09-2024, 11:57 AM
Zhongsheng Group's share price has dropped ~85-90% since its ATH in late 2021.
The Taipans (Jardines) got into Zhongsheng Group (~19% stake) around 10years ago at market prices which is quite similar to current. It increased its stake (+~2% to ~21%) into Zhongsheng as a result of selling its own Greater China business (Zung Fu China) at around the ATH timeframe - So the sales was good (selling at ATH) and bad (taking ~30% of the sale stakes in Zhongsheng shares) at the same time.
Prior price wars have taught us that the worst thing that could happen to shareholders, are competitors who do not need to make a profit in the foreseeable near future.
And with very strong headwinds from CCP's favoritism of EVs, Mr Market doesn't seem to be very wrong right now in terms of the discount from ATH. But car distribution-ships have very good business model/dynamics and if things do change one day, it will be coming back fast and furious stepping above its competitors' many dead bodies.
China’s car dealerships facing losses of almost US$20 billion
Government subsidies encouraging drivers to trade in older cars are largely responsible for the NEV sales surge but dealerships are hurting due to the industry’s continued price war.
The country’s best-selling automobile brand, BYD, started a fresh wave of discounting at the start of the year, the latest in a ferocious round of cost cutting that’s been going on since the beginning of 2023 in an effort to get consumers to buy more cars.
https://www.businesstimes.com.sg/interna...20-billion
The Taipans (Jardines) got into Zhongsheng Group (~19% stake) around 10years ago at market prices which is quite similar to current. It increased its stake (+~2% to ~21%) into Zhongsheng as a result of selling its own Greater China business (Zung Fu China) at around the ATH timeframe - So the sales was good (selling at ATH) and bad (taking ~30% of the sale stakes in Zhongsheng shares) at the same time.
Prior price wars have taught us that the worst thing that could happen to shareholders, are competitors who do not need to make a profit in the foreseeable near future.
And with very strong headwinds from CCP's favoritism of EVs, Mr Market doesn't seem to be very wrong right now in terms of the discount from ATH. But car distribution-ships have very good business model/dynamics and if things do change one day, it will be coming back fast and furious stepping above its competitors' many dead bodies.
China’s car dealerships facing losses of almost US$20 billion
Government subsidies encouraging drivers to trade in older cars are largely responsible for the NEV sales surge but dealerships are hurting due to the industry’s continued price war.
The country’s best-selling automobile brand, BYD, started a fresh wave of discounting at the start of the year, the latest in a ferocious round of cost cutting that’s been going on since the beginning of 2023 in an effort to get consumers to buy more cars.
https://www.businesstimes.com.sg/interna...20-billion