The Chinese Economy Sets Up for a Strong H2 and Jiuzi Holdings (NASDAQ: JZXN) is Taking Advantage of New Stimulus Programs
Chart setup indicates a strong near-term swing.
Approximately 8.4M shares in the float.
Good day everyone,
Jiuzi Holdings, Inc. (NASDAQ: JZXN) franchises and operates retail stores under the brand name “Jiuzi” to sell New Electric Vehicles in third and fourth-tier cities in China.
Current price $.79/share (as of 2PM EDT 7-11-22)
JZXN looks like it’s about to catch fire. In its last FYE (10-31-21) the company reported $9.54M in revenues, a net profit of $.04/share and a book value of $1.03/share, yet the company value has consolidated to $16.6M and is trading lower than the book value. Looks like a good opportunity for a bounce with JZXN.
JZXN looks way oversold like many Chinese companies but is operating in one of the hottest markets on the planet. China’s EV market is booming and JZXN is a fast-growing EV dealership. As of March 15, 2022, JZXN operated 37 franchise stores/dealerships and one company-owned store in the People’s Republic of China. JZXN sources EVs from over twenty manufacturers.
According to Statista, China has by far the biggest EV industry in the world. As the largest EV manufacturer, China’s EV production amounted to 3.5 million units in 2021, an increase of 1.6 times year-over-year. Revenues from the EV market reached approximately 102.2 billion U.S. dollars for the year, the highest in the Asia-Pacific region.
So, what are third and fourth tier cities in China? The Chinese city tier system is not official, it’s used in media to describe the size of a city. Beijing and Shanghai are number one tier cities. Tier three and tier four cities will have a GDP less than $67B and a population less than three million. Hangzhou City, where JZXN has its headquarters has a population of 10.3M, and is also the capitol of Zhejiang Province, population 64M.
JZXN is making aggressive moves toward growth with joint ventures, agreements with EV manufactures, and other dealerships. Below are links to press releases about the deals they’ve made to expand operations in just the past sixty days:
https://finance.yahoo.com/news/jiuzi-holdings-inc-enters-letter-120000768.html
https://finance.yahoo.com/news/jiuzi-holdings-inc-announce-entry-120000417.html
https://finance.yahoo.com/news/jiuzi-holdings-inc-enters-strategic-120000903.html
https://finance.yahoo.com/news/jiuzi-holdings-inc-expands-tob-120000936.html
https://finance.yahoo.com/news/jiuzi-holdings-inc-enters-strategic-120000617.html
The Chinese economy slowed in H1 2022 due to the Omicron outbreak and the consequent lockdown in the spring but is still expected to grow at an annual rate 4.3% in 2022 with significant H2 growth. The Chinese government has recently announced additional stimulus measures such as stepped-up macroeconomic policy easing with large public spending, tax rebates, policy rate cuts, and a more dovish stance on the property sector.
Like many foreign corporations listed on the NASDAQ, JZXN issues its earnings statement every six months instead of quarterly. With their fiscal H1 ended April 30, 2022, we expect to see a report soon. There is a full company profile and an organizational chart at the bottom of this page.
JZXN statistics:
FYE is October 31st, MRQ is October 31, 2021
Outstanding shares 21.4M
Float 8.4M
Revenues FYE 10-31-21 $9.54M
Cash (mrq) $8.5M
Book value (mrq) $1.03/share
EPS (FYE 10-31-21) $.04/share)
Insider ownership 60.5%
(Statistics based upon most recent filings)
Note the recent bounces in the JZXN price, $1.25 on June 23, $2.17 on April 26, and $1.95 on March 10. The incredibly low RSI (14) of 31.04 may be an indicator the shares have been oversold.
Company Profile (from JZXN website)
“Established in 2017, and headquartered in Hangzhou City, Zhejiang Province, Jiuzi Holdings, Inc., through its affiliated operating entities, franchises and operates retail stores under brand name “Jiuzi”, which sell new energy vehicles, or NEVs, in third-fourth tier cities in China. Almost all of the NEVs we sell are battery-operated electric vehicles. We also sell a few plug-in electric vehicles upon demand from vehicle buyers.
We have 31 operating franchise stores and one company-owned store in China as of April 2021. We entered the industry at a relatively early point and have gradually developed brand awareness through marketing and promotional events, and consumer acceptance due to our competitive pricing and large selections of NEVs in third-fourth tier cities. We received “2018 Zhejiang Business New Project” from Zhejiang Province Trade and Business Industry Association in 2018, and “Best Investment Potential” award from Leading Capital Summit for Mid to Small Business in 2019. We have a large number of franchisees and strong customer demand, which add to our leverage over supply chains in terms of selections and pricing. Our franchise stores have more space (5,000-12,000 square feet) compared to our competitors and we have a wide range of business partners, both of which help us provide better customer experiences; and the cost of launching a new franchisee is relatively low as compared to traditional 4S stores (4S refers to sales, service, spare parts and services), and it is easier to expand our franchise stores to cover geographical areas and lower the advertisement cost for our franchisees. 4S stores generate most of their profits from after-market services and require higher initial investment as compared to our franchise stores. In comparison to traditional 4S stores, our franchisees are also able to carry multiple brands of NEVs.
We source NEVs through more than twenty NEV manufacturers, including BYD, Geely, and Chery, as well as battery/component manufacturers such as Beijing Zhongdian Boyu, Shenzhen Jishuchongke and Youbang Electronics which focus on manufacturing charging piles, and Guoxuan Gaoke, and Futesi in battery production. On the capital side, we introduce franchisees to various capital platforms including Beijing Tianjiu Xingfu Control Group and Qinghua Qidi Zhixing, through which our franchisees and their vehicle buyers can obtain financing. Our business partners help us in providing a variety of products and extend our geographic reach.”
We will have a full report on JZXN soon.
The Traders News Team |