Haier SmartHome: Undervalued D-shares in focus

Last Updated: 8. Januar 2024By

Sometimes it’s the small details that make a stock stand out from the crowd. Haier SmartHome (WKN: A2JM2W) scores with cheap German stocks. The special thing about investing in the Chinese electrical giant is that there are three types of stocks. On the one hand, A-shares are traded on the Shanghai Stock Exchange, and on the other hand, D-shares are traded on the Frankfurt Stock Exchange. In addition, H-shares exist on the Hong Kong Stock Exchange.

In terms of rights, the stock exchange does not matter, the dividend payout is also the same, but: The stock costs around 2.50 euros on both the Shanghai Stock Exchange and the Hong Kong Stock Exchange. However, it is only 1.10 euros on the Frankfurt Stock Exchange. The German stocks are therefore drastically undervalued. However, there is no opportunity to purchase the D-shares cheaply in Germany in order to sell them in China or Hong Kong with a 50% profit.

Nevertheless, these stocks are increasingly coming into focus for investors, as there is of course hope that the gap between the trading places could be closed in the near future. However, this difference has existed for years. Therefore, it is questionable whether the stock values will align this year.

Chart Haier SmartHome, source: Stocks Screener Investor Verlag Which P/E ratio applies to German stocks A look at the company is still worthwhile, because: Haier SmartHome, like most Chinese stocks, is relatively cheaply valued. The market value is currently 25 billion dollars, which corresponds to 10 times the profit. Since the share price in Germany is only about half, the P/E ratio is cheaper here. It is 5. Because there is no difference in dividends between A, D, and H shares, owners of D shares can look forward to a dividend yield of 7 percent.

What is also interesting for you as a potential investor is that Haier SmartHome plays an important role in the global market. The manufacturer of various household appliances is the world market leader in various areas. Euromonitor International, one of the world’s leading market research companies, has once again listed Haier SmartHome as number 1 in the global major appliance brands in its 2022 annual report, making it the 14th consecutive year. First place was awarded for refrigerators, washing machines, wine coolers, and freezers.

On a good international path Around half of the turnover is generated internationally, and the company is also growing internationally at the fastest pace. This means that Haier SmartHome is not completely dependent on China and its economic development.

Potential investors could buy a real bargain with the cheaply valued D-share. In addition, there is still hope that the gap between Chinese and German stocks could close.

However, when considering this stock, you should also take into account that it is a Chinese stock with political risks. Therefore, you decide for yourself whether this stock would be something for your portfolio.

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