(CapitalWatch, Nov. 28, New York) This year has been tough on Chinese stocks as many investor favorites have seen significant devaluations over the regulatory tightening and the Sino-American tensions. Few companies are coming into December with gains, and this especially concerns technology and education companies, while many other industries also came under fire. Against this backdrop, CapitalWatch is zooming in on bargain finds.
Small-cap company Luokung Technology Corp. (Nasdaq: LKCO), trading on Friday at 92 cents a share, is among the few Chinese stocks that are actually up year-to-date. While it's trading below the required minimum today, LKCO shares have seen some significant volatility in 2021, starting the year at 71 cents a share and surging as high as $3.86 on its 52-week high.
And it's been quite an important year for Luokung. To begin with, the company won in court against the U.S. Department of Defense. That cleared the company from being designated as a Communist Chinese military entity on Donald Trump's investment blacklist, which could have led to its delisting. The victory followed on the heels of a similar court decision in the case of Chinese smartphone giant Xiaomi (OTC: XIACY; HKEX: 1810) and was a significant move justifying Luokung's listed status.
With this question cleared and out of the picture, investors may see other concerns with Luokung, and this was the focus of CW's November interview with the company's chief financial officer, Jay Yu, and chief technology officer, Baomin Li.
Asked about Beijing's recent tightening of the data transfer laws that especially concern the electric vehicle makers, Li said that Luokung is also cleared on this front.
"Our data centers were inspected by the authorities and our technology was reviewed," Li told CW last week, adding that this factor is one that differentiates Luokung from some competitors and especially the newcomers. He continued: "We know the rules and we play by the rules; this tidying up of the guidelines is a good thing for us. We adhere to the guidelines and we have established trust with the regulators."
Yu added, "The data is protected and encrypted. Even Tesla has to localize its services."
Emerging in High-growth Autonomous Driving Space
In another major development this year, Luokung has completed the acquisition of the control of eMapgo Technology. This enables Luokung to improve its autonomous driving HD map, integrated positioning, navigation, and related service capabilities. The move is also critical to the company's entry into the emerging autonomous driving market: eMapgo has the advantage of being a licensed player in the space that has a high entry barrier.
The navigation and mapping services for smart transportation and smart cities is Luokung's core growth driver in the long term, and the company now positions itself as a provider of spatial-temporal intelligent big data services, interactive location-based services, and HD maps.
Already, Luokung has seen a significant financial improvement. In the first half-year, the company's revenue surged fivefold to $37.8 million, according to the report released earlier this month.
Now, the company is entering growth stage and gaining traction in the highly marketable sector of autonomous driving. So far, the mapping technology developer has landed partnerships with several industry leaders including the research entity of auto giant Geely (HKEX: 0175) to provide autonomous driving simulation testing services. To name a few other big partners, Luokung is collaborating with Microsoft (Nasdaq: MSFT) and Volvo's Zenseact.
As of Friday, shares in Luokung were up 30% year-to-date and up 65% from the same time a year ago.
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