$QH - Chinese Stocks Rally
Following the latest Chinese stocks rally on Friday, many Chinese stocks started to soar due to the hype including Quhuo Limited (NASDAQ: QH) – the Chinese workforce operational solutions provider. Looking to further expand its business QH has partnered with Baidu, Inc. (NASDAQ: BIDU) and Karry New Energy Auto to start implementing AI technology and enhance its international business. With the company’s ever growing Return On Capital Employed (ROCE), QH stock forecast could be promising in 2023.
QH Fundamentals
Chinese Meme Stock Rally
Many small and micro-cap Chinese companies witnessed a significant rally on April 28th in a meme rally driven by social media interest. Some of these stocks are TOP Financial Group Limited (NASDAQ: TOP) which soared as high as 1250% reaching a price of 256 , and Magic Empire Global Limited (NASDAQ: MEGL) which climbed as high as 543% reaching a price of $5.87.
Affected by this rally, QH stock ran as high as 263% reaching a price of $5.4 on May 1st in a similar fashion to TOP and MEGL, however, the stock started to cool down decreasing 55% and reached a price of $2.4 at market close.
Partnerships with Baidu and Karry New Energy Auto
Having already provided workforce operations solutions to the biggest firms in China DiDi Global Inc. (OTC: DIDIY) and Meituan, the company is expanding its business by partnering with Baidu and Karry New Energy Auto.
Partnering with Baidu, QH will gain access to the highly demanded ERNIE bot which was applied for by 120,000 companies to test and is described as the Chinese answer to OpenAI’s ChatGPT. This partnership would allow QH to gain access to ERNIE bot’s features including interpreting human languages and delivering accurate, logical, and fluent responses almost on par with humans. ERNIE bot would allow QH to empower multiple business scenarios including front, middle, and back-office functions. Implementing AI technology to its existing technology model could significantly boost QH’s performance in the future.
Moreover, QH has entered a partnership with Karry New Energy Auto – a subsidiary of Chery Automobile Co. Ltd. – to work on creating new international operation models for China’s new energy vehicles.
The new model will be called the HAPPY dealership model which will facilitate operations for overseas dealers and help them with importing, shipping, stocking, transporting, and shipping capacity management. The idea of the partnership is for QH to further expand its international business and help domestic firms to expand globally as well, in order to enhance the international brand image of the two companies.
QH Growing ROCE
With the potential to be a multi-bagger, QH’s Return On Capital Employed (ROCE) has been increasing over the past few years reaching 4.7% compared to -2.6% 3 years ago. To further explain, ROCE is used to estimate how much pre-tax income a company earns on the capital invested in its business. However, QH’s ROCE is still below the industry average of 8.6%, but the rapidly growing ROCE could be a clear indication that the company is moving in the right direction. As a result, QH could have a promising stock forecast in the future.
QH Financials
In its 2022 annual report, QH reported ¥1 billion in assets including ¥95.4 million in cash and ¥5.5 million in restricted cash. QH witnessed a decline in assets from ¥1.1 billion while its cash increased from ¥28.6 million and its restricted cash from ¥2.3 million in 2021. QH’s liabilities declined YoY from ¥661.9 million to ¥558 million as its current liabilities decreased from ¥609.1 million to ¥487.9 million, however, its long-term debt increased from ¥3,000 to ¥1.3 million.
QH revenues declined YoY from ¥4 billion to ¥3.8 billion, however, its gross profit increased from ¥175.6 million to ¥252.7 million due to a decrease in its cost of revenues from ¥3.8 billion to ¥3.5 billion. Finally, the company’s operating income increased YoY to ¥35.6 million from an operating loss of ¥139.8 million and its net loss shrank from ¥191.2 million to ¥16.4 million
Technical Analysis
QH stock trend was neutral as it was trading in a sideways channel between the support at $1.22 and the resistance at $1.8. However, the stock recently broke out of the channel forming a gap that it started filling.
Looking at the indicators, QH is currently trading above the 21 MA, 50 MA, and 200 MA which is a bullish sign. The RSI is neutral at 53 and the MACD is bullish but is approaching a bearish crossover.
Fundamentally, QH’s most recent catalyst was the Chinese stocks meme rally alongside the recent partnership with Baidu to implement AI technology.
QH doesn’t have a clear indication of how the stock is going to shift. However, the stock could possibly cool down and return to its sideways channel as the hype for Chinese stocks slowly dies out. Nevertheless, more news about AI implementation could drive the stock in the future.
QH Forecast
Following the recent meme rally that affected Chinese stocks, QH stock soared overnight riding the Chinese stocks hype train but started to cool down afterward. To further enhance its technological infrastructure, QH announced its partnering with Baidu to start implementing its ERNIE bot which has a strong demand and could potentially rival ChatGPT. Moreover, QH partnered with Karry New Energy Auto to form a new dealership model called HAPPY that aims to aid international dealers and dealerships which will improve the international image of the two companies. Finally, the company’s ROCE has been increasing over the past few years indicating that the company is on the right track for success. Based on these reasons, the QH stock forecast could be bullish moving into the latter half of the year.
QH Fundamentals
Chinese Meme Stock Rally
Many small and micro-cap Chinese companies witnessed a significant rally on April 28th in a meme rally driven by social media interest. Some of these stocks are TOP Financial Group Limited (NASDAQ: TOP) which soared as high as 1250% reaching a price of 256 , and Magic Empire Global Limited (NASDAQ: MEGL) which climbed as high as 543% reaching a price of $5.87.
Affected by this rally, QH stock ran as high as 263% reaching a price of $5.4 on May 1st in a similar fashion to TOP and MEGL, however, the stock started to cool down decreasing 55% and reached a price of $2.4 at market close.
Partnerships with Baidu and Karry New Energy Auto
Having already provided workforce operations solutions to the biggest firms in China DiDi Global Inc. (OTC: DIDIY) and Meituan, the company is expanding its business by partnering with Baidu and Karry New Energy Auto.
Partnering with Baidu, QH will gain access to the highly demanded ERNIE bot which was applied for by 120,000 companies to test and is described as the Chinese answer to OpenAI’s ChatGPT. This partnership would allow QH to gain access to ERNIE bot’s features including interpreting human languages and delivering accurate, logical, and fluent responses almost on par with humans. ERNIE bot would allow QH to empower multiple business scenarios including front, middle, and back-office functions. Implementing AI technology to its existing technology model could significantly boost QH’s performance in the future.
Moreover, QH has entered a partnership with Karry New Energy Auto – a subsidiary of Chery Automobile Co. Ltd. – to work on creating new international operation models for China’s new energy vehicles.
The new model will be called the HAPPY dealership model which will facilitate operations for overseas dealers and help them with importing, shipping, stocking, transporting, and shipping capacity management. The idea of the partnership is for QH to further expand its international business and help domestic firms to expand globally as well, in order to enhance the international brand image of the two companies.
QH Growing ROCE
With the potential to be a multi-bagger, QH’s Return On Capital Employed (ROCE) has been increasing over the past few years reaching 4.7% compared to -2.6% 3 years ago. To further explain, ROCE is used to estimate how much pre-tax income a company earns on the capital invested in its business. However, QH’s ROCE is still below the industry average of 8.6%, but the rapidly growing ROCE could be a clear indication that the company is moving in the right direction. As a result, QH could have a promising stock forecast in the future.
QH Financials
In its 2022 annual report, QH reported ¥1 billion in assets including ¥95.4 million in cash and ¥5.5 million in restricted cash. QH witnessed a decline in assets from ¥1.1 billion while its cash increased from ¥28.6 million and its restricted cash from ¥2.3 million in 2021. QH’s liabilities declined YoY from ¥661.9 million to ¥558 million as its current liabilities decreased from ¥609.1 million to ¥487.9 million, however, its long-term debt increased from ¥3,000 to ¥1.3 million.
QH revenues declined YoY from ¥4 billion to ¥3.8 billion, however, its gross profit increased from ¥175.6 million to ¥252.7 million due to a decrease in its cost of revenues from ¥3.8 billion to ¥3.5 billion. Finally, the company’s operating income increased YoY to ¥35.6 million from an operating loss of ¥139.8 million and its net loss shrank from ¥191.2 million to ¥16.4 million
Technical Analysis
QH stock trend was neutral as it was trading in a sideways channel between the support at $1.22 and the resistance at $1.8. However, the stock recently broke out of the channel forming a gap that it started filling.
Looking at the indicators, QH is currently trading above the 21 MA, 50 MA, and 200 MA which is a bullish sign. The RSI is neutral at 53 and the MACD is bullish but is approaching a bearish crossover.
Fundamentally, QH’s most recent catalyst was the Chinese stocks meme rally alongside the recent partnership with Baidu to implement AI technology.
QH doesn’t have a clear indication of how the stock is going to shift. However, the stock could possibly cool down and return to its sideways channel as the hype for Chinese stocks slowly dies out. Nevertheless, more news about AI implementation could drive the stock in the future.
QH Forecast
Following the recent meme rally that affected Chinese stocks, QH stock soared overnight riding the Chinese stocks hype train but started to cool down afterward. To further enhance its technological infrastructure, QH announced its partnering with Baidu to start implementing its ERNIE bot which has a strong demand and could potentially rival ChatGPT. Moreover, QH partnered with Karry New Energy Auto to form a new dealership model called HAPPY that aims to aid international dealers and dealerships which will improve the international image of the two companies. Finally, the company’s ROCE has been increasing over the past few years indicating that the company is on the right track for success. Based on these reasons, the QH stock forecast could be bullish moving into the latter half of the year.