The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
In spite of being the epicentre, the People’s Republic of China is making a fast recovery from the pandemic. Businesses are slowly attaining full efficiency while citizens have accepted the new normals. Still, the fact that the Chinese automotive market grew by 4.4% in April is quite surprising. In other words, it sold 2.04 million vehicles in the period. Experts state that this ‘sales boom’ is an indirect result of COVID-19 safety concerns. A similar trend is expected to happen in India soon. Let us see what the struggling automotive market of India can learn from China:
Buy orders out number the sells today. yesterday the sells out numbered the buys by around 2 to 1 today its 1.3/1 to the buyers, so could just be an early morning tree shake. Seems to be a decent amount of orders lined up at 40p. Could be a relatively flat morning and heat up this afternoon. IMO
By the time that happens it will already be priced in and you will have missed the boat potentially. The share price reflects minimum production activities and practically zero sales. How can it not go anyway but up if it survives the next few weeks? I would expect an almost immediate price correction to around the 60p mark when everything reopens. The question you have to ask is, will it fold or will it survive, and then place your bets!
Jimjam, the reopening schedules change weekly, for all we know gaydon could open in 2 weeks. I know manufacturing inside out and I know that there will be a stock of at least a months worth of production parts ready for reopening. The speed that parts can be manufactured and shipped to the customer these days is frightening, sometimes within a day. Gone arethe days of 6 week lead times.
I think investors are loosening up now. Daily reopening of businesses, falling death rates....other countries coming out of lock-down almost completely. In my opinion I did my hard work 2 days ago. The auto industry is waking up again, there could not be a better time to start buying shares! This share is risky but the potential for growth far outweighs the risk in my opinion. Level 2 not looking too bad today, looks like a level kind of day with the potential for 39 by close.
Bought in yesterday at 30.5p. Im buying on the premise that, the factories only closed due to the corona pandemic. Sales have only fallen off a cliff for the same reason. The share price has fallen way below what I believe to be it's true value, and if the company can survive until August/September. I am confident that I will make a healthy return. I nearly bought in at around the 50p mark, but for one reason or other didn't get round to it. So I'm lucky to get in much lower than I initially thought I'd buy in at. I only bought what many of you would consider a small stake, but if it doubles, Ill be happy to get more than I would from my savings account. And if I lose it all, it's not really much of a worry.
It's very difficult to force yourself into buying shares when the market is crumbling, but ultimately if you are going to make money in the long term, it's for me the only time to buy.