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Thoughts from an anonymous banker on China

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June 22, 2011 – Comments (11)

The most interesting things are always said off the record. While you won’t get attribution for these observations from a very opinionated investment banker, I thought they might all be worth talking about. (Note: I don’t agree with all or maybe even any of them)

On Goldman Sachs
They are so short-term now…and hedged long/short. If they are involved in something, it will eventually blow up.

On U.S. companies operating in China

Most are not complying with U.S. law. They are bribing officials and just not telling you. Ask them. Ask them point blank.

On Big 4 auditors
They are destroying Chinese companies by forcing them into non-Chinese financial frameworks. When Chinese companies go public, they are #1 or #2 in their industry. After the big 4 get to them, they are trash. Think about it: If you pay all of your taxes, then you have no money left to pay your bribes. They also have no ethics. Why don’t they ever find problems at big companies like PetroChina? PetroChina is doing many of the same things as the small companies, but it would be bad for business to criticize the Chinese government.

On the Chinese stock market

It is a joke, a game. No companies use it for corporate financing. And there is too much money and not enough stocks. Very overvalued. Why does Geely have a higher multiple than BMW? Geely is trash next to BMW -- worse company, worse brand, worse cars, etc. And BMW probably has more growth in China. As soon as the people buying Geely cars today have enough money, they will buy BMWs.

On the French
French companies do very well in China because they’ve learned all of the Chinese tricks and are happy to use them!

On Chinese A shares

Why has there been fraud in U.S.-listed Chinese stocks, but not in China-listed Chinese stocks. The answer is not that fraud does not exist in China listed stocks. These guys all learned the same things. Rather, the Chinese government is probably being very careful about fines and penalties to maintain stability.

11 Comments – Post Your Own

#1) On June 22, 2011 at 3:44 PM, portefeuille (98.66) wrote:

Hong Kong’s Li Says Exchange Will Avoid Worst of China Accounting Scandals

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#2) On June 22, 2011 at 3:47 PM, portefeuille (98.66) wrote:

#1 also see comment #2 here.

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#3) On June 22, 2011 at 6:08 PM, MegaEurope (< 20) wrote:

Did you challenge him on any of these claims?  Particularly the comment about Big 4 auditors does not make sense.

The comparison of Geely to BMW is just dumb.  Geely is growing 40%+ a year compared to BMW growing 10% a year.  And they both have low double digit P/E ratios.

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#4) On June 22, 2011 at 6:09 PM, MegaEurope (< 20) wrote:

Not to mention, most Chinese are not i-bankers who will be able to afford BMWs.

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#5) On June 22, 2011 at 8:38 PM, portefeuille (98.66) wrote:

And BMW probably has more growth in China

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Investment vehicle for the new rich

...

Luxury vehicle sales continue on the fast lane this year, although growth of China's entire vehicle market has slowed down sharply from a blistering pace in 2010.

Mercedes-Benz posted a robust sales increase of 86 percent in China in the first quarter of this year, while BMW and Audi's China sales surged by 71.2 percent and 24.6 percent. And ultra-luxury brand Bentley grew its sales in China by 66.8 percent.

However, the entire vehicle market in China only edged up 8.1 percent.

...

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#6) On June 22, 2011 at 8:45 PM, portefeuille (98.66) wrote:

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08.06.2011
BMW Group increases sales by 22.1% in May

Most successful May ever for BMW Group sales
Solid double-digit growth across Europe, America and Asia

Munich. The BMW Group is well on its way to a record year with another all-time sales high for the month of May. A total of 147,563 BMW, MINI and Rolls Royce brand vehicles were delivered to customers (prev. yr. 120,850/ +22.1%). Deliveries for the year to the end of May climbed 20.7% to 667,511 vehicles (prev. yr. 552,866).

...

The BMW Group made strong retail gains across the globe, driven by its three most important markets Germany, USA and China. In the German market 29,372 (prev.yr. 22,993/ +27.7%) BMW Group vehicles were registered in May. Sales continued to increase in the U.S. with the delivery of 26,452 (prev. yr. 22,092/ +19.7%) vehicles in May. In Mainland China, 21,150 customers took delivery of a new BMW Group vehicle (prev. yr. 13,998 units/ +51.1%). Solid double-digit growth was also reported by the Group in all major European markets in May, as well as in the so-called BRIKT markets: Brazil (+57.3%), Russia (58.3%), India (+160.9%), Korea (+49.1%) and Turkey (130.2%).

...

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#7) On June 22, 2011 at 8:51 PM, portefeuille (98.66) wrote:

BMW made new all-time highs today. yeay ...

BMW in Frankfurt trading.



enlarge

 



enlarge

 

http://caps.fool.com/Ticker/BAMXF.PK.aspx

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#8) On June 22, 2011 at 8:59 PM, portefeuille (98.66) wrote:

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#9) On June 22, 2011 at 10:07 PM, Frankydontfailme (29.30) wrote:

hehe. Sure love ze German engineering. 

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#10) On June 22, 2011 at 11:59 PM, portefeuille (98.66) wrote:



enlarge

from this presentation. Volkswagen in China (pdf).
also see this presentation. Audi in China (pdf).

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#11) On June 23, 2011 at 12:00 AM, portefeuille (98.66) wrote:

http://caps.fool.com/Ticker/VLKAY.PK.aspx
http://caps.fool.com/Ticker/VLKPY.PK.aspx

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