 Good day, fellow investors. Today we are going to analyze a company, BYD, the largest global electrical vehicle producer from China. We're going to talk about how to position yourself into these long-term trends that we know that are about to happen, but how to find investments that are low risk and can lead to high rewards. For example, if you look at US healthcare, everybody knew that there would be more and more older people, that there would be improvements in healthcare 10 years ago. Nevertheless, healthcare still delivered outstanding returns by beating the SAP 500 by more than 42% over the last 10 years, which is a great result. The reason behind such long-term outperformances is the market's myopic attitude. The market sees only what will happen in the next few quarters, perhaps one or two years, and doesn't see the trends that will happen over 10 years. Therefore, if you're smart, you can position yourself into such trends by thinking way ahead of what the market will do. And the best way to position yourself is to find cheap investments that the market is completely disregarding, but will benefit enormously from those trends. If we look at the global electric vehicle forecast, we can see that the current number of electric vehicles is 2 million, which is very, very little. However, the expectations are that by 2040, the number of electric vehicles will be between 50 million from the negative expectations and 200 million in the most positive expectations. So in the negative scenario, electric vehicles will grow 25 fold. In the positive scenario, electric vehicles will grow 100 times. Now, here I think those estimates by the International Energy Associations are always a big conservative. If we hit 200 million, what is stopping us to hit 400 million? That all depends on how fast will the disruption in the environment be. So if the disruption is faster, if the energy costs go lower, the battery costs, we can see a much, much higher acceptance of electric vehicles. If we just look at electric car sales and market share, we can see that Norway has almost 40 percent of market share is electric vehicles. Second is the Netherlands with about 6 percent. But if the costs go lower, we can expect to see Norway market share all around the world. And as there are 70 million cars sold in the world per year, and we expect that number to grow as the global economy develops, by 2025 we can see 30-40 million new cars per year coming onto the market. Which means that by 2030 we could already have 400 or even more cars on the market. So this is a huge trend. Nobody knows will it grow 25 times 100 or as it is possible 200, 300, 400 times. And there is also the possibility that all these electric batteries usage and everything is used overall in other sectors, not only the automotive. So there is a lot that can happen. Let's see how we can best position ourselves there. I have already made a video about Tesla. You can find it here or in the link in the description below. So check that if you are interested in Tesla. Let's now dig into BYD. So BYD is the largest global electric vehicles producer, mainly focused on China. And its sales are 92% in China. So it does not expand globally yet. Perhaps that's a smart thing for now because if you expand globally then you enter into the global margin war. For now BYD manages to raise its revenue, not this year because the Chinese government lower subsidies, but has managed in the past to raise its revenue. And there are other projects, not only cars that BYD is in. The revenue breakdown, BYD is 55% vehicles, 38% handset and assembly services and 7% rechargeable batteries. However, there is more. BYD has been heavily invested into these projects, the Sky Rail, Monorail projects that it plans to develop all around China. So there is more potential for revenue and profit growth. What I really like about the company is that even if it's in the electric vehicle sector, it is profitable. The net profit margin was 5% in 2016, however it will be lower in 2017 because of the already mentioned subsidies that are cancelled. Also revenue won't grow this year, but with the projects, with the development, they are expected to continue to grow in the future. If we look at the financials, the price earnings ratio is 37%. Those forward price earnings ratio, I'm always very wary of looking at because those can change all the time and depends how analysts change their expectations. As the revenue is not growing, as the margins are going down, I don't see how that can go to 20%. Nevertheless, 4.5 net profit margin, even if the company doubles in the next few years, it will again be a price earnings ratio above 20% or even if the forward price earnings ratio is right, it will be a price earnings ratio of 10%. For China, for the risks, for everything, I think there are better investments in China and we have seen in the previous videos that there are really some gems can be found in China. Nevertheless, BYD will probably do well over time if there isn't really a terrible financial situation where it's debt, because it has doubled the debt in relation to the equity, probably to the monorail investment. But that makes the company a risky investment from the debt perspective, from the net profit margin, which is a normal net profit margin for the whole industry. So if we look at Daimler, the net profit margin is higher than BYD's. The price earnings ratio is much lower, 7.8, even if yield is 4.26%. Thus, the more a company is a stable established car producer, the lower is the price earnings ratio. How can that be? That is because the established car producers have seen recessions in the past and everybody that's analyzing those companies knows what happens in a recession. Margins get squeezed, get negative. I think the margin goes from positive to minus 15% during the recession. So that still has to hit those new up and coming electric vehicles producers. So that's a risk that really deters me from investing in such new companies, even if they are hot, even if they are growing. In addition, Daimler also expects to add 10 new electric vehicles by 2022, as does any other car producer. So there will be a lot of competition. It will be a normal automotive industry segment with normal margins where a little bit somebody can win, somebody can lose, but don't expect miracles and huge things there, because it is, again, the automotive cycle car industry. Now, someone might say, okay, but Buffett is invested in BYD. If Buffett is invested, it must be a great deal. Yes, let me first show you this, that Buffett invested when it was around $1. Now it's 8.81. So Buffett really invested before anyone else was seeing the trend and anyone else was interested in the trend and in the midst of a recession, not after eight years in a positive cycle and when the stocks is really, really hot. So when investing in the long term, we have to really think like Buffett, position ourselves in something where the potential is huge. And even if nothing happens, BYD was producing handsets of or whatever they were doing in 2009 with an interesting technology to produce batteries and cars, which they have developed and Buffett's investment worked out well. But he invested so much, then the company would do fine even without the electrical for his investment. So he always investment with a margin of safety. So I will close here with BYD. I will not invest in it. It's a little bit too risky for me for the potential reward going into a commoditized automotive industry where the margins are always tight and always cyclic up because I like to be exposed to the trend, which is strengthening, but I prefer to do it with metals with nickel with copper because because there I can find some margins of safety with the lowest cost producers and those will have huge returns if nickel, copper and those metal prices increase. Thank you for watching, looking forward to your comments and I'll see you in the next video.