Tesla’s new Model 3 is expected to be a major boon for Hota

The post Mechanical Parts Supplier Courts Tesla, BMW appeared first on Become a Better Investor. Watch the video with Andrew Stotz or read a summary of the World Class Benchmarking on Hota Industrial Manufacturing Company Limited.

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Background

Founded in 1966, Hota Industrial Manufacturing Company Limited is a producer of gears, shafts, axles and other parts for automotive, agricultural and medical industries.

The company also produces electric wheelchairs through its medical division.

Some of Hota’s biggest clients are Tesla, BorgWarner and BMW.

Tesla’s new Model 3 is expected to be a major boon for Hota, which is thought to be supplying as much as 50% of component parts. It was the principal supplier for the Model X and Model S as well.

Business Description

Hota operates through three main divisions.

The transmission division produces several types of transmission shafts, water pump gears and transmission components for cars, trucks, motorcycles and agricultural machinery.

Hota

The machinery division, through the brand HARTECH, manufactures gear tooling machines. Those include machines controlled by computer, such as CNC high-precision gear shaving, hobbing and deburring machines. HARTECH supplies most popular car manufacturers, such as BMW, GM, Ford, Nissan, Porsche, Ducati, BorgWarner and Yamaha.

The medical division produces electric wheelchairs and electric scooters for old and disabled people.

The biggest portion of revenue, 65%, comes from the US. Some of its biggest clients there are Tesla and BorgWarner.

Leadership

“David” Shen Guorong serves as Chairman, while “Charles” Chen Junzhi rounds out the team as president.

World Class Benchmarking

Profitable Growth drifted to #3 from #2, which it held from 2014 to 2016.

Hota still ranked among the top 411 of 1,370 medium Consumer Discretionary companies.

Profitability, the main driver of Profitable Growth, remained at #2, in line with 2016. Growth remained below average for the second straight year.

Asset utilization remains stable but poor at #8. Profit margin, on the other hand, has been World Class since 2014.

Sales growth is above average at #4. But Margin change ranked poorly at #8, a far cry from the 2013-2015 period.

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DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article.



About the Author

Dr. Andrew Stotz, CFA
Dr. Andrew Stotz, CFA is the CEO of A. Stotz Investment Research, a company providing institutional investors with ready-to- invest portfolios in Asia that aim to beat the benchmark through superior stock selection. The company also provides buy- and sell-side clients with financial models to value any company in the world and World Class Benchmarking to determine what companies are financially world class. Previously, as Head of Research at CLSA, Andrew was voted No. 1 Analyst in Thailand in the Asiamoney Brokers Polls for 2008 and 2009. He was also voted No. 1 Analyst in Thailand in the 2009 Institutional Investor magazine All-Asia Research Team Report. Andrew earned his PhD in finance at the University of Science and Technology of China in Anhui province, with a focus on answering questions raised by fund managers and analysts during his career about picking stocks and managing portfolios. In addition, Andrew has been a lecturer in finance for 22 years at various universities in Thailand. Since 2013, he has been the president of the CFA Society of Thailand. He is also the author of How to Start Building Your Wealth Investing in the Stock Market.