Why kandi technologies group, inc. stock jumped

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  • https://finance.yahoo.com/news/kandi-announces-jvs-sale-4-121700354.html
  • http://www.forbes.com/sites/markrogowsky/2013/12/28/kandi-crush-an-electric-car-vending-machine-from-china-could-upend-the-auto-industry/
  • https://finance.yahoo.com/news/kandi-technologies-group-announces-jvs-122000608.html
  • https://finance.yahoo.com/news/kandi-technologies-reports-first-quarter-133300180.html
    https://finance.yahoo.com/news/law-firm-kirby-mcinerney-llp-203000333.html
  • Why kandi technologies group, inc. stock jumped

    1. 1. Why Kandi Technologies Group, Inc. Stock Jumped
    2. 2. Kandi Technologies’ stock pops Kandi Technologies stock is up 14% today after it announced second-quarter EV sales. • EV sales in the second quarter were up 238% sequentially to 4,114 units. • These sales come from a 50-50 joint venture with Shanghai Maple Guorun Automobile Co., Ltd. • This is a preliminary result; full earnings will be reported on Aug. 11, 2014.
    3. 3. EV sales picking up in China This is another sign that EV sales are picking up in China. • Management pointed to success in the company’s carshare rental program in Hangzhou as well a new group leasing model that has customers paying monthly for 1-3 years for a vehicle, insurance, and power.
    4. 4. Follows another pop last week Kandi Technologies’ stock jumped last week after the same JV received a $38.1 million subsidy from the Chinese central government for producing 3,000 vehicles. • Subsidy payments from the government are often delayed, although Kandi’s management hopes payments are more regular under new rules proposed by the Ministries of Finance, Science and Technology, and industry and IT. • The City of Hangzhou is also expected to announce a subsidy policy for EVs soon.
    5. 5. A long-term trend in China With smog choking many Chinese cities the government has incentive to get more people to drive EVs. Kandi is an early mover who has built an innovative business model for EVs.
    6. 6. Will profits grow in 2014? Kandi Technologies is still in the early phase of growth, and has a lot of potential this year: • Profit from the EV JV in the first quarter was just $1.7 million. • Reliance on subsidies from central and local governments has to be a concern. • Investors should also be concerned about the cost and distraction of an SEC investigation that began in November to whether management manipulated the stock and committed fraud. • Profits will likely grow given EV sales growth but that’s assuming subsidy payments are made on a regular basis and not delayed, like they were last year.
    7. 7. What to do now… Kandi has a lot of growth potential but the SEC investigation and reliance on subsidies from the Chinese government has to be a huge concern. • Many Chinese companies in emerging industries like battery technology, EVs, and solar have shown flashes of strong results only to be mismanaged or passed by higher quality companies. • These same risks exist for Kandi, and with Tesla Motors and major global automakers eyeing China’s market, there’s competitive risk as well. • The risks outweigh the potential rewards -- potential investors should consider sitting on the sidelines to watch this stock.
    8. 8. What does the future of the automobile look like? Technology may redefine what we think of driving.

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