General Motors Intrinsic Value – Shanghai Govt. Calls on General Motors to Increase Investments in China
June 20, 2023
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The Shanghai government has recently called on General Motors ($NYSE:GM) to increase its investments in China. General Motors is an American multinational corporation that designs, manufactures, markets, and distributes automobiles and automobile parts worldwide. It has invested in many joint ventures and new factories in Guangdong, Shanghai, and other areas. Despite this, the Shanghai government believes the company could be doing more to increase its investments in the country. This call for increased investment highlights the importance of GM’s presence in China, given the country’s large automotive market.
General Motors is likely to take this call to action seriously, as China is a major hub for the automotive industry. The company has already made significant investments in China and is likely to further expand its presence in the region. This could include increasing marketing and advertising efforts in an effort to target Chinese consumers, as well as investing in more research and development projects within the country. Furthermore, GM could also look to increase its local manufacturing capabilities.
Share Price
The statement followed news that the company’s stock had opened at $33.0 and closed at $32.3, down by 3.4% from the previous closing price of 33.4. The Shanghai government hopes that the American auto giant will take advantage of the country’s favorable business environment and large market potential to expand its presence and influence in China. The statement further noted that General Motors is an important player in the global auto industry and that they have great expectations for the company to make greater contributions to the development of the Chinese auto industry. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for General Motors. More…
| Total Revenues | Net Income | Net Margin |
| 160.74k | 9.3k | 6.0% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for General Motors. More…
| Operations | Investing | Financing |
| 17.02k | -16.23k | 550 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for General Motors. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 267k | 192.77k | 48.61 |
Key Ratios Snapshot
Some of the financial key ratios for General Motors are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 6.0% | 29.8% | 7.8% |
| FCF Margin | ROE | ROA |
| -3.2% | 11.4% | 2.9% |
Analysis – General Motors Intrinsic Value
At GoodWhale, we have conducted a comprehensive analysis of GENERAL MOTORS‘ fundamentals. Based on our proprietary Valuation Line, the intrinsic value of GENERAL MOTORS shares is estimated to be around $54.1. This implies that the current price of GENERAL MOTORS stock, which is traded at $32.3, is undervalued by 40.3%. We believe there is a good opportunity for investors to benefit from the mispricing of GENERAL MOTORS shares. More…
Peers
General Motors Co, Stellantis NV, Toyota Motor Corp, and Ford Motor Co are all leading automobile manufacturers. They each have their own unique history and strengths, but they are all competitive in the market today.
– Stellantis NV ($NYSE:STLA)
Stellantis NV is a holding company that was created in 2021 through the merger of Fiat Chrysler Automobiles and Groupe PSA. The company is headquartered in the Netherlands and is majority owned by the French automaker Groupe PSA. Stellantis is the fourth-largest automaker in the world by sales, with a portfolio of 14 brands that include Fiat, Chrysler, Jeep, Dodge, Ram, Alfa Romeo, Lancia, Maserati, Peugeot, Citroën, DS, Opel, and Vauxhall.
– Toyota Motor Corp ($TSE:7203)
Toyota Motor Corp is a Japanese multinational corporation that manufactures vehicles. It has a market cap of 27.43T as of 2022 and a Return on Equity of 11.32%. The company produces vehicles under five brands, including Toyota, Lexus, Daihatsu, and Hino.
– Ford Motor Co ($NYSE:F)
Founded in 1903, Ford Motor Company is an American multinational automaker that has its main headquarters in Dearborn, Michigan. The company sells automobiles and commercial vehicles under the Ford brand and most luxury cars under the Lincoln brand. Ford also owns Brazilian SUV manufacturer Troller, an 8% stake in Aston Martin of the United Kingdom, and a 49% stake in Jiangling Motors of China. It also has joint-ventures in China, Taiwan, Thailand, Turkey, and Russia. The company is listed on the New York Stock Exchange and is controlled by the Ford family; they have minority ownership but the majority of the voting power.
As of 2022, Ford Motor Company’s market capitalization is $47.32 billion, and it has a return on equity of 23.7%. The company’s main business is the manufacture and sale of automobiles and light trucks. In addition to its core automotive business, Ford also operates in the financial services sector through its Ford Motor Credit Company subsidiary.
Summary
General Motors (GM) saw its stock price dip on the same day the Shanghai government urged the company to increase their investments in China. This decrease in stock value may be indicative of potential investors’ concerns about GM’s ability to succeed in the Chinese market, given heightened competition from domestic auto companies. Although GM has experience manufacturing and selling cars in China, the company’s operations there are smaller than those of rival automakers.
As such, the company would need to make significant investments to ensure their growth in the region. To that end, investors will want to keep an eye on GM’s future performance in the Chinese market going forward.
