JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

Investment Advisors

BMW Brilliance Dealership Survey: 20% Discount for 5 Series, Escalating Inventory

TSLA Suspended S and X New Orders Amidst Escalating US-China Trade War

Tesla China Update: Tariff Cut on July 1st Mutes Q2 Delivery; Model 3 Component Shipment Ramps

Investment Advisors, JL Warren Capital

Junheng Li

Equity Bottom-Up

Brilliance China Automotive / Equity Bottom-Up

<p>Brilliance China Auto (1211 HK) is an early victim of China’s open market access, which unfortunately, is largely due to the OEM's incompetence.  The stock took a hit, down 12% last night - as its JV partner BMW is said to increase its stake in BMW-Brilliance Auto partnership from its current 50% to unspecified higher percentage.  Anecdotally we have always heard from dealership that Munich has been long dissatisfied in its relationship with Brilliance.  Breaking free of the “marriage” is made possible by China’s latest policy to allow foreign OEMs to operate by themselves without a local partner by 2022. Within the next 15 years, we will see a rebalancing of the relationships between the auto JVs, as the need for a local intermediary for market access is phased out.  Judging from the poor sales of the non-BMW cars that Brilliance makes and sells, there is little sign of tech transfer from BMW to Brilliance despite 15-years of the partnership since 2003.  Brilliance is likely to remain the main manufacturer of BMW cars, but BMW is now free to set up its own factories and work with multiple partners.  A 35% YTD selloff in Brilliance stock can be partially explained by its ongoing diminishing role in BBA JV.</p>

Brilliance China Auto (1211 HK) is an early victim of China’s open market access, which unfortunately, is largely due to the OEM's incompetence.  The stock took a hit, down 12% last night - as its JV partner BMW is said to increase its stake in BMW-Brilliance Auto partnership from its current 50% to unspecified higher percentage.  Anecdotally we have always heard from dealership that Munich has been long dissatisfied in its relationship with Brilliance.  Breaking free of the “marriage” is made possible by China’s latest policy to allow foreign OEMs to operate by themselves without a local partner by 2022. Within the next 15 years, we will see a rebalancing of the relationships between the auto JVs, as the need for a local intermediary for market access is phased out.  Judging from the poor sales of the non-BMW cars that Brilliance makes and sells, there is little sign of tech transfer from BMW to Brilliance despite 15-years of the partnership since 2003.  Brilliance is likely to remain the main manufacturer of BMW cars, but BMW is now free to set up its own factories and work with multiple partners.  A 35% YTD selloff in Brilliance stock can be partially explained by its ongoing diminishing role in BBA JV.

Brilliance China Auto – Victim of Open Market Access