Hedge funds Tiger Global Management and SRS Investment Management recently increased their holdings in this Chinese company to some 21.5% and 15.3% of its outstanding shares, respectively.
eHi Car Services (EHIC)
from Cabot Stock of the Month
The #2 car rental company in China, eHi Car Services (EHIC) has a great trajectory of growth—plus, I like to think it tries harder.
After coming public in November 2014, the stock made a little progress in the first four months of the year, but trading volume remained light. Then, in mid-May, volume mushroomed rapidly, as buyers moved in, driving the stock from 11 to 14 in the days before the company’s first quarter earnings were released. Happily, the report justified their buying!
eHi’s revenues increased 61% from the year before, driven mainly by a 74% increase in car rental revenues. The company’s fleet size increased by 82% to 24,362 vehicles. And most importantly, the company swung from a loss to a tiny profit.
Looking ahead, management estimates that full year revenues will grow approximately 76% to 88% from the year before, and that the company will end the year with a fleet of 37,000 to 40,000 vehicles, representing an increase of 87% to 103% from year-end 2014.
The stock has recently corrected from a high of 18 to the 14 region, where it is likely to find support, and if it does so, I will continue to rate it a buy.
Timothy Lutts, Cabot Stock of the Month, www.cabot.net, 978-745-5532, July 2, 2015