“Tesla is a great electric car company. But it’s not a good investment. Tesla’s market capitalization approaches $700 billion, or 1,000 trillion won. It is the combined market capitalization of global finished cars such as Toyota and Mercedes-Benz. Do you understand? Tesla’s current stock price is a bubble that has attracted future value to the soul.” This
is the main logic pointing out Tesla’s high valuation. Last year, Tesla delivered 1.3 million vehicles. Toyota, the number one finished vehicle, is approaching 10 million units. However, Toyota’s market cap is only half that of Tesla. The Japanese carmaker’s price-to-earnings ratio ( PER ) is 11x. Tesla is 73 times.
Even considering the prospect of the global automobile market shifting from internal combustion engines to electric vehicles, the gap is not small. Why has this gap widened? Did the market overestimate Tesla’s potential? Did I underestimate Toyota’s ability? This is also the reason why short selling forces are focusing their attacks on Tesla.
The resort business that makes good money, the reason why I was anxious
“Benjamin Graham (the founder of stock analysis) also had a blind spot. He overlooked that some businesses are worth paying a premium for.”-Charlie Munger
This <Teslam Goes> is a special project with the theme of ‘Korea Investment Master and Tesla’. Following last week’s Part 1 ‘Business Model’, Part 2 is ‘Value Evaluation and Premium’. Kang Bang-cheon, former chairman of Asset Plus Asset Management, explained this issue using his own business as an example in his 2021 book “Kang Bang-cheon’s Perspective”.
“I ran a resort in Seogwipo, Jeju Island for four years. It was a business aimed at Chinese tourists. Achieved business performance that generated surplus every year. Oddly enough, the resort business has always been insecure. When you wake up, there is a new resort. Once the 140 rooms were full, sales stopped increasing. Chinese tourists were also sensitive to political issues.”
“On the other hand, as soon as the asset management company was established in 2008, management was very difficult due to the financial crisis that originated in the United States. It posted an operating loss for six consecutive years. However, even if it was difficult right now, if the public offering deposits accumulated, it could be expected that profits would be sustainable and volatility would be low. The best fund The imagination of growing it gave me a boost.”
Former Chairman Kang said that he realized an important point through the management of the two companies: that we should look at the ‘quality of profits’ implied behind the profits rather than the profits shown in the financial statements. This means that the quality of profit is different.The four factors that determine the quality of profit he said are ①continuity ②volatility ③extensibility ④predictability Among these, the most important is ‘extensibility’ of profit.
“ PER is actively assigned”
“Future profit, that is the problem”– Peter Lynch
“How do you find the expected return on stock investment? It is the difference between the future market cap and the current market cap. The future market cap can be obtained by multiplying future earnings by the future PER multiple. I define this as ‘ K-PER’ . K-PER is assigned from one’s own point of view based on profit quality and business model.”
Kang Bang-cheon cited ‘mobile digital network’ as the fourth factor of production in addition to the traditional three factors of production such as △land, △labor, and capital. It is. A company that utilizes this fourth factor of production creates value by ‘utilizing rather than owning’. As the number of customers increases, customer value increases, marginal cost decreases, and winner-takes-all is possible.
Representatively, these are innovation platform companies such as Apple, Amazon, and Google. He said that when evaluating the value of these companies, a ‘premium’ should be given. The specific conditions are as follows.
◎ Conditions for a Premium Company in Valuation
1) What stage of the company’s life cycle is it
– Growing company > Mature company
2) Service industry than manufacturing
– Reinvestment cost is lower
3) ‘Global’ mobile digital network company
– Amazon/Netflix > Kakao
4) Consumer goods rather than durable goods
– Products purchased within a month > Products replaced after 10 years
5) Companies that improve over time
– Is brand value continuously accumulating
?
Expansion is difficult
7) Be cautious about predicting future profits
– Do not arbitrarily estimate without a standard for comparison
“Future profits must be reasonably estimated. Let’s look at battery company A. The PER given to manufacturers is usually 10x. Company A’s current PER is 70x and its market cap is KRW60tr. If Company A’s future earnings do not increase more than 7 times, there is a possibility that its stock price will decline. Assume that the global battery market size is estimated at 150 trillion won and Company A’s share is 25%. If the operating margin is 10% on sales of 38 trillion won, operating profit is 3.8 trillion won. Future market cap is PERIt is 38 trillion won by 10 times. It means that it is difficult to expect an additional rise” (Kang Bang-cheon’s perspective).
If you agree with ‘Future Commander Tesla’Kang Bang-cheon says he prefers ‘commander companies’ that are at the top of the industry when considering business models and K-PER . According to him, there are currently three commander companies. Apple and Microsoft in the PC realm, Apple and Google in the smartphone. No matter how well Amazon and Meta do, it’s in the palm of this commander’s hand. He argued that a new commander would emerge in the future. This is the Tesla of the future mobility industry.
“ When an OS is installed on a car of the future, the commander of that OS appears. The automobile industry, which was a manufacturing industry, is changing into a service industry. The Internet of Things ( IoT ) will be at the core of mobility innovation . Following the smartphone, the car will be reborn as a disruptive innovation platform. Imagine putting your hands on the steering wheel. What will people do instead?”
Former Chairman Kang predicted that the purchasing standards for automobiles would also change in the era of smart mobility. He is more interested in what OS it runs on than the brand of the vehicle . Also, future software costs outweigh the price of the vehicle. The difference between smart mobility is determined by how well autonomous driving, the OS that will oversee it, and apps for consumer experience are implemented and operated. In other words, Tesla, Apple, Google, and Baidu occupy the top of this value chain.
Authors Jeong Ji-hoon and Kim Byeong-joon of “Future Vehicle Mobility Revolution” predicted that smart mobility would recreate the value of space and time. Just as food trucks freed caterers from the constraints of place and space. The car of the future can be transformed into a space for △mobile office △rest △stay. Automakers are already introducing various concept cars related to this.
On the 11th (local time), the San Francisco 메이저사이트Standard, an American local magazine, reported that Google Waymo’s self-driving taxi has turned into a ‘love hotel’, and that various deviances such as drinking and sexual acts are taking place in driverless vehicles. This is in the aftermath of the recent release of regulations by the state of California, allowing robo-taxis to operate throughout downtown San Francisco throughout the day.
It can also be dismissed as a ‘happening’ brought about by immature technology. However, a report published in the journal ‘Tourism Research Yearbook’ in 2018 predicted that “hotels used by the hour are likely to be replaced by self-driving vehicles.” Five years ago, someone saw a robot taxi and foresaw a change. The future is bound to spread slowly.
Bangcheon Kang said: “I believe that the first company in the world to achieve a market capitalization of 1 quintillion is Tesla. If you don’t agree with the assumption that Tesla will be the commander of the smart mobility era, the company’s stock is too expensive. You don’t even have to buy it”
▶’Teslam Goes’
unravels the back story of Tesla, which will lead the ‘mobility revolution’ in the 2020s. Elon Musk, who is considered the best ‘Visionary CEO’, is also a great subject of exploration. Introducing news and issues from domestic and foreign Tesla YouTubers and Twitter users. Subscribe to the reporter page below to receive weekly articles.