I know nothing about DWSC until today when I received recommendation from the Future Superstock. Although I was a bit excited about the company, I checked this thread for some background info due to the reputation of The Future Superstock. I am glad I did, so I won't get into this without further study.
However, you can't estimate a potential profit of a company operating in China based on average wage there. People who use rental car are not the people who earn average wage. There are millions of such high income people in China. You might find it hard to believe that people spend US$1000 for a sit down dinner, especially in China. But it is not news in Guang Dong. Lots of people there has money but has no place to spend. Don't forget there are thousands of people from all over the world doing business there, they would rather pay a premium to rent a car than get into a crowded train or bus if they have to travel. And don't forget the operating cost is much less in China than in the US. They can easily find a clark does the paper work and answer the phone who get paid less than US$100/month, while in the US you have to pay at least 10 to 20 time of that amount.
Having said that, I also find $10K per car per year profit hard to believe, if the daily rental fee is $40 per car like here in the US.
Assuming 80% usage, the revenue per car per year should be around $12K. But what if they charge $80 per car per day? It is not impossible,If the demand is higher than supply. Have you heard that in some cities in China, you have to pay more than US$300 to just get phone line set up at home? Still thousands of people on the waiting list had to wait more than half year to get that done.
I talked to my father-in-law who lives in Guang Dong and who was in financial business in China about DWSC. He felt this business has great potential with high risk esp the government control. He felt It is possible to achieve US$10K to 20K per car per year in revenue. The profit margin should be higher than here in the US. But the actual profit should be lower than US$10K per car per year. How much lower, up to experts amount you to figure that out.
I will keep an eye on this stock. |
