2 Chinese EV Plays if You Like Tesla

Capital allocation and management quality help locate potential leaders in the fledgling space.

Kate Lin, CAIA 10.05.2021
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EV

The Morningstar capital allocation rating evaluates company management’s impacts on shareholder value. “If a company invests well, that's obviously going to be important to their earnings growth, and that's going to reflect in the total shareholder return over time,” says Mathew Hodge, Director of Equity Research at Morningstar.

Hodge says the metric is particularly important in assessing a growth business, say transformational technology or biotech, whether the capital investment is allocated to the meaningful growth franchise. “We really care about, are they investing in the right things, like is the strategy right? Are they doing so at the right price? And is management able to execute?” he adds. The same logic can be applied to the EV industry, whether a company’s strategy is positioned for the growth of tomorrow.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Delta Electronics Inc258.00 TWD0.78Rating
Shenzhen Inovance Technology Co Ltd Class A64.73 CNY-1.33Rating

About Author

Kate Lin, CAIA

Kate Lin, CAIA  is a Data Journalist for Morningstar Asia, and is based in Hong Kong

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