China’s Great Wall Motor Co. surpassed Tesla Motors Inc. (TSLA:US) as the top-performing auto stock as sport utility vehicles prove more profitable than electric cars costing four times as much.
The CHART OF THE DAY tracks the carmakers’ shares since Tesla’s U.S. listing on June 28, 2010. Great Wall, China’s largest SUV manufacturer, has jumped 717 percent in Hong Kong through Dec. 2, exceeding the 630 percent gain for Tesla. The lower panel shows the consensus of analyst recommendations for Great Wall was 4 out of a 5-point maximum, more than Tesla’s 3.3, according to data compiled by Bloomberg.
Great Wall, based in Hebei province, has risen about 9,000 percent since its 2008 low, the most in the 28-member Bloomberg World Auto Manufacturers Index, as surging sales and low costs generated the widest operating profit margin among listed carmakers in 2012. SUV sales in China climbed 73 percent in October, even as the government battled to curb air pollution.
“While attention has been focused on flashy Tesla, Great Wall has continued its steady rally,” said Mari Oshidari, a Hong Kong-based strategist at Okasan Securities Group Inc. “Great Wall is likely to extend gains on strong SUV sales, helped by demand from officials switching from foreign luxury cars.”
China’s Cabinet is encouraging officials to purchase domestic brands as part of President Xi Jinping’s austerity drive. Great Wall’s stock rally has made Chairman Wei Jianjun Asia’s wealthiest car executive with a fortune of $7.8 billion, compared with Tesla Chairman Elon Musk’s $6.9 billion, according to the Bloomberg Billionaires Index.
While Tesla shares have more than tripled this year, they’ve fallen 36 percent from a record on Sept. 30 after three fires in its Model S sedans threatened to prompt a recall. The vehicle’s price ranges from $70,000 to more than $100,000, compared with $15,700 to $24,100 for Great Wall’s bestselling Hover H6 SUV. The Chinese automaker will have an operating margin of 18.1 percent next year, versus 3.4 percent for Tesla, according to analyst estimates compiled by Bloomberg.
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