I bought 3% Haier (690D)

Business fundamentals look good. German issue trades at much lower price …

This is not investment advice. Please read the disclaimer. I might own discussed stock(s) currently or at a later time. I might transact in any securities at any time.

If you prefer to read the pdf version click here. (links may not work in pdf)

Haier Smart Home has strong fundamentals historically and should continue to benfit from the rising Chinese middle class but also strong international sales. Depressed consumer spending in near-term?

  • ROEs in >15% with dividend payouts in the 30-40% range.
  • BVpS compounded with 21.5% over 10yrs

The company has a triple listing: 600690 CH (longest), 6690 HK (least longest) and 690D (2nd longest). The Chinese shares trade for about 2x book value, which might be about fair for such fundamentals, but their are the Chinese risks attached.

Since the German shares trade at a considerable discount at around 1/3rd of the CH/HK shares, one would effectively pay 0.7 P/B and receives a 6% dividend yield (instead of 2%). This discount might shrink once again if the public interest is awakened once more or the company would buy back shares in Germany (not that likely). In the meantime i expect to receive growing dividends supported by growing EPS/FCFpS and historically low payout ratios around 30%.

  • Why is the German listed stock trading so much lower? I think in Germany many of the listed Chinese stocks turned out to be a fraud, which, i guess, is not the case here.
  • I recently saw some 690d tweets on twitter yet again (after i decided to take a look) and H1 results were posted
  • As of Sept 8, shares trade with EUR equivalents of €1.14 (GR), 3.24 (HK), 3.71 (CH), as usual trades above the HK issue. The implied discount to HK listing would be a bit smaller.
  • Spreads in Germany are super wide and the stock highly illiquid and but there are occasions when the spread narrows to almost zero.

Strong H1’22 results. But below-headline developments show some negatives:

  • More inventory
  • More receivables (esp. 1-2yrs: +100%)
  • Heavy use of wealth managment products (incl. in cash and cash equivalents)
  • A positive: ‘The government issued policies to promote home appliance consumption and upgrade. Incentive programmes targeting home appliance consumption have been launched by several municipal governments in the second quarter of 2022.
  • And another one: Higher energy prices make it more worthwhile to buy new more efficient and/or smart appliances. And while electricity prices stay high, commodity prices (costs) and shipping costs come down.

I bought a 3% position on Sept 8 at € 1.127 (and thought about selling it the same day in the afternoon at slightly higher prices).

Add (Sept 9, 2022): Since I realized high traffic from a wallstreet online discussion (newest, comment), i had a look and wanted to clarify here: I thought about selling later that day not because of not thinking that it is a good investment (or bet), but because i thougt there was a high chance of buying back my shares at a lower price. This would have worked.

This is not investment advise. I may transact at any time in any security. Mentioned stocks might be highly illiquid..

Further reads


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