There have been talks about slowdown in the Chinese automobile market, which have certainly weighed on the sentiments on some of the automobile stocks. While investors may be right to be cautious given lower automobile sales in China, the sell-off is probably overdone. This opens up opportunities to buy some of these stocks at low valuations.
Geely Automobile (175.HK)
Since hitting a low in August, Geely’s shares have begun recovering in stock price, but is still some distance away from its high in April. Even with this recovery, it is still about 45% below its all time high in late 2017. At its current P/E ratio of 9.3x, the stock looks like a bargain. If there is a traditional car company that is focused on the future, Geely is probably the one that comes to mind, as the company has recently invested in Volocopter, which develops flying cars.
Great Wall Motors (2333.HK)
Just like Geely, shares of Great Wall Motors have not been doing too well since reaching a high in April. The stock recently rose strongly after third quarter profit soared more than 500% year-on-year following a 59% plunge in earnings during the first half of the year, as it controlled costs, sold higher-priced vehicles and reduced discounts. The stock’s current P/E ratio of 9.8x appears to be reasonable. What’s also noteworthy is that the stock currently has a dividend yield of 5.2%, making it an attractive choice for dividend investors.
Dongfeng Motor Group (489.HK)
Dongfeng’s shares have been on a downtrend in the past few years. This is a reflection of the flat performance in terms of revenue and profit. Nevertheless, the stock has begun recovering since hitting a low in June this year. At a P/E ratio of 4.6x and a dividend yield of 5.1%, this may be a suitable stock for conservative investors.