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Tiziano Frateschi
Tiziano Frateschi
Articles (1940)  | Author's Website |

Tiger Global Management takes large stake in Ehi Car Services Ltd

June 04, 2015 | About:

Chase Coleman (Trades, Portfolio), Tiger Global Management LLC’s founder, during the month of May started his position in eHi Car Services Ltd (EHIC).

He bought 9,403,060 shares that represent a significant 16.44% of company’s outstanding shares and the 1.65% of total assets of Chase Coleman (Trades, Portfolio)’s portfolio. After that buy, the price of the stock didn't face any relevant change (a decline of 1%).

The company is a car services provider and car rentals provider in China to both individual customers and corporate clients to meet their travel, leisure, business and ground transportation needs. It provides chauffeured car services to corporate clients. Its car services include routine services such as airport pickup and drop-off, inter-office transfers and other business transportation needs, as well as event-driven activities such as conventions, promotional tours and special events.

EHIC has a profitability and growth rated 2/10 with null returns (ROE 0.15%, ROA 0.09%, ROC 0.48%) that are underperforming the 75% of other companies in the Global Rental & Leasing Services industry. Its financial strength is at average level if compared to the company's sector (cash to debt of the company is 0.74 while the whole industry has an average cash to debt of 0.65).

During the last 12 months the price of the company rose by 35% (+89% since the beginning of the 2015) and is now trading with a P/B of 2.30 and a P/S of 0.90. All these ratios shows the company is currently trading at cheap price if compared to the company’s history.

According to GuruFocus, Chase Coleman (Trades, Portfolio) is the only guru that holds some shares of the company.

During the first quarter of 2015, the company reported strong growth when compared to the first quarter of 2014. Revenue grew by 60.7%, from RMB183.9 million to RMB 295.5 million and EBITDA grew by 114.1% from RMB 54.0 million to RMB 115.7 million. More than this, the first quarter of 2014 ended up with a net loss of RMB 17.8 million but Q1 2015 had a net profit of RMB 3.6 million (this net profit includes RMB16.9 million that EHIC recognized in connection with the waiver of warrants in Travice Inc).

With this buy, Tiger Global Management intends to help eHi Car Services Ltd expand its car fleet; the goal is to capitalize the growing china’s auto-rental industry.

Chairman and Chief Executive Officer Ray Zhang said

Our operating and financial results for the first quarter of 2015 reflect continued progress in our business growth strategy. We are rapidly expanding our fleet while maintaining industry-benchmark utilization rates by leveraging our integrated technology platform and wide geographic scale. We believe that the prominence and reputation of our brand, the quality of our services, our nationwide service network and our advanced, proprietary technology platform differentiate us in the market and make us well-positioned to capture and address the evolving demands for car rental and car service customers.

On May 22, 2015 two big shareholders of the company, Ctrip Investment Holdings (CTRP) and Crawford Group, Inc. (CRD.A, CRD.B)signed agreements with SRS Partners I Mauritius Ltd and SRS Partners II Mauritius Ltd for the sale of 2,666,666 common shares at a price of $6.00. After this sale, the two shareholders will remain the largest ones of EHIC.

Forecasts for the fiscal year 2015 are enthusiastic; the company estimates an increase of revenues of about 76% to 88% and an increase of their fleet size of approximately 87% to 103%.

About the author:

Tiziano Frateschi
You can read about me on www.theextraincome.info, which gives suggestions on position trading.

Visit Tiziano Frateschi's Website


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