With Chinese New Year finished, many are now ushering in the year of the Monkey. However, they are mistaken – 2016 is the year of the luxury car.
As mentioned in a recent post, one of the best performing industries in China is the automotive industry. With positive growth in the face of adversity and a very bright future, China’s automotive industry is only looking to expand more in the future.
However, it’s misleading to view the automotive industry as a whole, and it is without a doubt that the industry is made up of many segments in itself. According to a report from McKinsey & Co., the Chinese market for premium cars grew at an impressive rate of 36% a year, a rate several paces ahead that of the nation’s overall automotive market.
In addition, China’s premium car market is expected to have an annual growth of 12% until 2020 – the highest in the world, and far surpassing the second fastest growing country of Spain at 5%. It is growing at such an incredible rate that many industry experts are expecting the Chinese premium car market to overtake that of the US and become the world’s largest.
But whether it overtakes the US as the world’s number one market or not, the cold hard facts remain. The Chinese automotive market is growing, and growth is being led by the premium car market.
Harmony Stock: Local Luxury Cars in China
InvestAsian believes that investors should turn their heads to focus on this company – an automotive dealer that exclusively sells luxury and ultra-luxury passenger vehicles in China. China Harmony New Energy Auto Holding Ltd. (HKG:3836), more commonly known as just “Harmony Group”, is doing well and expecting to do even better.
Harmony Group operates 25 outlets throughout China and is #2 in the market in terms of total number of branches open for the luxury and ultra-luxury sectors. Most outlets are located in populous and affluent cities in China with rapidly-growing local economies.
The company is performing extremely well in comparison to its past performance and current peers. Harmony stock boasts great returns with ROI of 21% and ROE of 22%. With one of the highest net profit margins in the competition, Harmony Group treats its investors well with not only great returns, but also with a decent dividend yield of 2.09%.
Add everything with more qualitative factors such as aggressive global expansion by Chinese car companies in general, and this business has a great future. We recommend Harmony stock as a buy.
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