Why Kandi Technologies Group Inc. Stock Jumped Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Kandi Technologies Group Inc. (NASDAQ: KNDI  ) jumped as much as 11% after announcing a new subsidy from China.

So what: Kandi's 50-50 subsidiary with Shanghai Maple Guorun Automobile Co. has received a subsidy of $31.8 million from the Chinese central government for the sale of 3,000 electric vehicles in the final three quarters of last year, and another 1,000 in the first quarter of this year. CEO Hu Xiaoming said that the payment would allow Kandi to further accelerate EV sales and development.  

Now what: The subsidy payment amounts to about $8,000 per vehicle, which isn't far off from the subsidies given in the U.S. Given the company's reliance on the subsidy, and the Chinese government's tendency to be anything but prompt with these kind of payments, I'd be cautious jumping into Kandi.

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  • Report this Comment On July 07, 2014, at 4:09 PM, corstrat wrote:

    First of all, do the math. $31 million for over 3000 cars is around $10,000 per car, BUT, if you read the whole PR, you will notice that this is only the Federal PRC portion of the subsidies. The City of Hangzhou is mandated by the PRC to match their payment, so anticipate any day now a further announcement for another $31 million. Plus that only covers sales made in late 2013 and Q1, 2014.

    KNDI has already produced over 3000 EV's in April and May, (June's numbers not out yet). So anticipate another big subsidy payment for Q2.

    BTW, the average price the small KNDI EV's sell for before the subsidy is between $15 and 20,000 depending if it is the two door or four door. Yes, after subsidies, the cars are almost free to the Billion China residents that can't afford a $100k TSLA with a smaller subsidy even in the US.

  • Report this Comment On July 07, 2014, at 4:35 PM, Gdubu wrote:

    The macro issues of smog and oil consumption deny the continuing proliferation of the ICE car in China. EVs are the best intracity solution for greater personal consumer mobility, continued economic growth, and fighting pollution. To drive the adoption of EVs the PRC provides subsidies and other incentives for buyers of Chinese manufactured EVs. Today the subsidies can cover more than seventy-five percent of the cost of an EV. The PRC’s stated goal remains to have five million EVs in use by 2020 despite lagging in its effort to date.

    If you're cautious about jumping into KNDI Travis you're actually being reckless by passing on one of the great emerging growth stock opportunities of our time. And by the way, KNDI’s short interest is about 7 million shares and with the continuing company and market developments a classic short squeeze is going to commence at some point. KNDI is a both a tremendous long term investment and a great trade at this level.

  • Report this Comment On July 07, 2014, at 7:25 PM, captainccs wrote:

    >>>Given the company's reliance on the subsidy...

    Kandi is profitable even without the subsidy.

    2012 net profit $6,049,479

    "However, we recorded a net loss in 2013, this is mainly because of the loss caused by the fair value change of financial instruments. After excluding the effects of fair value change of financial instruments and stock award, we still recorded a Non-GAAP net income, increased 23.9% compared to 2012."

    That's a non-GAAP net profit of $7,495,000 for 2013.

    Look it up in the 10-K

    http://secfilings.nasdaq.com/filingFrameset.asp?FileName=000...

  • Report this Comment On July 08, 2014, at 12:28 AM, CSIHawaii wrote:

    Why is it that with all the Motley Fool articles - the real expertise is in the readers' comments?

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