Senmiao Technology Ltd (NASDAQ:AIHS) is currently flying under Wallstreets radar. The stock has surged 213% over the past month, with investors continuing to rally behind the Chinese Fintech. With a current market capitalisation of $60.1 million, the micro-cap stock has captured speculators attention. Analysts are yet to place the first 12 month price target on the stock publicly, making it much more difficult to gauge a forecast moving into 2021 and beyond. However, by using the information provided to investors alongside tracking investor trends, we can decipher everything you need to know about AIHS as an investment.

AIHS’s Strategic Co-operation Agreement with Sichuan Hongyu Enterprise

Announced in early August, the 3 year strategic co-operation agreement aims to facilitate the purchase of EV’s for potential use in the ride-hailing market. The agreement also aims to promote both companies “with a goal to further expand its automobile transaction and related services business.” Investor interest in EV companies has surged over the past few years. Hence, industry related companies have seen incredible stock growth. With AIHS surging on no related news, we can assume investors have peaked their interest on the EV potential moving forward.

“Finally, we believe that our cooperation with Hongyu Auto will enable us to give our ride-hailing drivers more cost-effective access to electric vehicles which aligns with our social responsibility to lower overall carbon footprint.  We are excited about this next step and look forward to finding more innovative ways to drive long-term sustainable growth for our shareholders.”

Mr. Xi Wen, Chief Executive Officer of Senmiao – Public announcement here.

 

AIHS capturing market share in Chinese Ride-hailing

Ride-hailing is mentioned frequently throughout AIHS’s recent public announcements. Ride-hailing simply means the process of hiring a driver to take you to a specific destination. Just like an Uber or a Taxi, ride-hailing has a lot of room for growth in China’s growing cities. AIHS integrated service aims to target second and third tier cities of Mainland China, which are currently growing at a rapid rate. The greatest threat to AIHS ride-hailing ambitions will be the extended economic impact of the COVID-19 virus. A second wave of COVID-19 in Mainland China would subdue any progression made in the ride hailing industry, which of course would be a threat to their wishful ambitions.

“We continue to believe in the huge long-term market opportunity resulting from the rapid development of the online ride-hailing service industry in China… To summarize, we believe we are executing on our goal in becoming an outstanding and leading provider of automobile transaction and related services to the growing online ride-hailing eco-system in China.”

Xi Wen, Chairman, Chief Executive Officer and President of Senmiao

Looking forward into 2021 and beyond for AIHS

Before I begin, I remind our viewers that this is not financial advice. Instead, the information above is an investment commentary from extensive research.
It is important realise why there is little to no analyst commentary on this stock. After looking through quarterly financial statements and NASDAQ data, there is no long term guidance on revenue. The risk associated with the long term outlook is relatively high. With a relatively small market cap analysts are yet to provide any in-depth research to the public.
The EV revolution has blown a gust of wind into the industry and hence AIHS has tailored their business model to incorporate the EV hype. This trend should see AIHS continue to thrive if they are able to expand into the EV sphere. At $1.41 the stock is reaching the upper quartile of its 52 year high. This would suggest a better average price is attainable for longer term investors (opinion not advice).
Smaller cap companies provide a much higher risk to investors. While the large returns may be attractive, micro-caps do not have the best track record for sustainability. This is definitely a stock to watch as we move into 2021. Especially if AIHS can successfully implement a strong EV strategy and endorse it into the ride-hailing market.

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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

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