 Hey, hi everybody, welcome. Welcome to my channel again Russell Moore dedicated to financial literacy I want to welcome to the channel again Be sure to subscribe Hit the like hit the like and the notify button. Okay, if you want more more content in the future I want to get strident right into this. I mean actually this is a interesting topic for me and I've been doing my research on China and And Should we invest should you invest should I invest in China? Well, I already I've already answered that question that's so Here's my disclaimer. I'm not telling you not to or you should that's gonna be your decision Okay, so I am not trying to encourage people what to do with the Chinese stocks. You're not suing me All right, so but I do want to go over this I'm gonna touch on delisting the I want to touch on regulations with the CCP The slowing economy in China. We'll talk about all of that, but I want to first start off by talking about I'm just gonna mention a few companies. This is definitely not the end and to be all of all the companies in China They got tons of companies. I'm not gonna touch on NEO or anything like that But I want to talk about some companies that I mean this is this is deep to me Alibaba is down 73%. I looked at this stock price today. It's like seventy four dollars This is a company less than a year ago was at three hundred dollars a share and they're right now at seventy four seventy five dollars a share Yum China Yuma why you in? It's an American company in China, but young brands you guys heard of young brands KFC pizza hut there They're down 43% 10 cent 10 cent company 53% JD.com 55% these are major major tech companies in China They're the they're there. They're the Microsoft the Googles and the Amazons and the Netflixes of China, okay, and All of them are down severely And so the question is there's been this sell-off I mean Alibaba 73% Doesn't deserve it Doesn't deserve this type of sell-off is what my quest my question the viewers are asking out there Should I invest and if I do do I should I sell and if I don't sell Do I hold and how long? And if I don't have any of these shares if I don't have any of China's here should I purchase? Well, that's gonna be up to you. I'm just gonna give you some information and then you decide All right. Now as I mentioned Alibaba 73% I want to talk about really first of all the intrinsic value because the first question I always hear is is there anything wrong? with the business is There anything wrong with these businesses? with Alibaba young China 10 cents JD.com is there anything wrong with them? Are they losing money? Are they in debt? What's the fundamentals? What's the fundamentals of these companies and let me just give you a quick brief rundown? If you look at the intrinsic value, and I'm not gonna go into all of that what that means There's an intrinsic value calculator that you can look at up online and basically it just determines What this company would be worth in the next 10 or 15 years how much cash flow they'll have We'll just say it like that. What would they be worth from a share price standpoint? Just based on their current growth Well Alibaba We're looking at a lease and this is the discounted version. This is with all pessimism $230 between $196 and $230 is where it's gonna go. I Think it's gonna go further. This is just a little this is a moderate version. This is a moderate estimation Yum China around $86 to $90 a share and Guess where young China is right now about $35 a share Alibaba's at $74.75 a share 10 cent down 53 percent intrinsic value. It's headed towards around 837 That's what they estimate the intrinsic value on 837 You know where they are now around 355 358 Between 355 and 358 these companies are like 50 60 percent Undervalued right now the same thing with JD.com They're undervalued they have strong profit margins still they have revenue. They're still growing revenue wise This is all on the internet They have strong cash flow Alibaba has so much cash To get this they have so much cash a boatload of cash They've got so much cash that if they wanted to pay off all their debt right now, they could Amazon doesn't can't even do that Yum China They hardly have any debt at all hardly any debt All of these companies very low debt high cash flow profit revenue they got all of that going on strong fundamentals Next question, what are the shares really worth and are they undervalued I just answered that I just told you what they're worth They're there Why is the market price so different from the value of the business? That's the that's the underlining question If they're so if they if they've got all this revenue and they're profiting and they're doing so well Why is the share price down? Number one panic selling and I'm gonna go over the reasons why they're panic selling, but the number one reason that's most sell-offs take place the number one is News bad negative news reports and then the other one is emotions and heard selling Oh We got a negative report now people are selling. Oh, I better sell and people just follow Versus doing their own research and making their own decision So heard selling as a result of panic selling so the panic people the panic sell and Then the people that don't do any research follow them and they sell and Now you've got this huge sell-off and nobody's doing the true research to see how valuable these companies Are and see and in order to do to research this You've got to research China So let me just give you a couple of things about China Where we've been misinformed? Number one, let's talk about the delisting for a minute delisting because that's been a concern President Trump when he was in office said look we're gonna delist companies that will not allow us to audit their books accounting books Any Chinese companies that will not allow us. So what he did is he established a board the public company Accounting oversight board And he also signed into law an act and the name of the act is holding foreign companies Accountable act HFC a a holding foreign companies accountable act now. I'm not against that You know China's like what our number one competitor that we're competing against them there I hate to call my enemy, but basically they are like our enemy. And so I Didn't have a problem with him saying look you're gonna be on our you're gonna be on our Our stock market we want to know what kind of practices that you're having from an accounting standpoint, but here's the problem They already are being audited by an international companies See we think they're only they're only being watched by China They're only being audited by China. That's not true The companies that they're being audited by Alibaba young China Tencent JD JD dot-con Neo and all of them They're getting audited by an international company not a Chinese company So there's that doesn't mean that they still can't you know do some shady stuff But that goes for any company even the American ones The American companies can same thing So so that's one just know, but that's one thing that we want to get rid of is that and here's the thing about Here's the thing about the delisting President Trump said the delisting timeline will be three years You have three years to comply and allow our SEC our board to audit you and it starts in 2021 so they're not gonna be delisted if they get delisted it won't be until 2024 so we got three years Why are you not buying this stock? We got three got three years gang Before there's a delisting and to be honest with you. I don't think there's gonna be a delisting. You know why? The investors most of the investors that are investing in these companies from China are Americans It's Americans you guys most of us are the ones that are investing Here's another thing about delisting if it does get delisted they have dual listings They're in the American the American market But they're also in Hong Sing The the Chinese Hong Kong market So all they're gonna do is just okay. We'll just stay in Hong Kong and then we can move our shares If depending on what brokerage firm you are like fidelity You can definitely transfer if you if your shares get delisted if you lose out you can transfer them to the Hong Kong market You guys That's not a reason not to buy shares. That's not that that's not a reason to sell delisting Learn about it find out about it. What is this delisting all about and is it really gonna happen? I don't think so Okay, now here's another thing the CCP is out to destroy these companies the regulators all these regulations Well, you got to find out what they were regulating Let me give you an example Alibaba what for one Ali Baba? They're like the Amazon of China. Okay, here's what they were doing They had their merchants to people that were selling on their platform They had to agree Not to sell on other platforms the competitors that's like That's like amazon telling us we can't sell on ebay You can't sell on etsy You can only sell on our platform if you sell on our platform. You cannot sell anywhere else That's monopoly and so the CCP the chinese communist party said No, that's not fair to your competitors We want everybody to be able to make money A lot of people don't realize china is more capitalist than we than we can than we think they are Yes, I know it's ccp. It stands for chinese communist party. I get that But their economic belief from their last president who established he realized look capitalism is what's gonna work So their whole system is more capitalism. Now they are authoritarian Meaning they'll shut you down. They still have the authority They're not as free as america and they do have a heavy hand and they probably go too far But to say that they shouldn't regulate some of this Regulations are good In some cases for some of these companies Because the the smaller companies were not able to make money Because they couldn't get any of the merchants to come over because they had a commitment with with alibaba And the same thing with tencent a lot of these companies larger companies and what they would do is they're swallowing up the smaller ones Taking all the market share We're addressing that with our tech people here That's what the why do you think congress has been meeting with our big tech? That's been one of the issues How the their their competitive practices against other companies you guys We can't blame china for that. Okay. All right. I am not this pro china dude Okay, so don't send me any comments. I'm just saying we got to look at the truth All right, and then the last thing a slowing growth economy Yeah, their growth their economy is slowing for various reasons I think this year is like the gp Gp is like five percent They were averaging around eight to nine percent growth and this year is it's the slowest it's been in years I mean a long time five percent But that won't last forever. My point is there aren't any good reasons To not invest in these stocks. I'm not telling you to do with them You got to do it and do your own research first What do I always say if you don't learn you won't earn If you don't learn you won't earn but but find out why don't just pull out of a stock Don't just pull out of a company and stop Investing in it when you haven't really done the true research and you're just following what other people do or say And so what we have with a lot of these chinese stocks is particularly and even Charlie Munger Warren Buffett's sidekick his buddy. I should call him sidekick. He's not his sidekick. He's a great man and a great investor Charlie Munger said That alibaba months ago was highly undervalued and when he said that I said I need to look more into this and not just listen to the street Okay, and he was right They're really undervalued right now I mean think about this. They're down 73 percent. Look at the stock price for last year. Just look at it I want you and this is what I want you guys to do Look at the stock price of all these companies. I just brought up the four companies Look at their stock price last year or two years ago And keep this in mind They're still bringing forth revenue. They're still growing. Maybe not at the same pace. They're still profiting They still have strong cash flow. They have low debt or no debt I mean, that's wonderful from the fundamental standpoint. There's still good strong companies All right, I'm done with this This segment I may do a part two I'm sure I'm missing out a couple of things that I should have informed you on But take a look at it Look at uh, look at china stocks All right Have a wonderful for wonderful day, and I pray that you'll be blessed always and forever