[ET Net News Agency, 11 April 2019] Citi Research raised its target price for Guangzhou
Automobile (02238) to HK$11.08 from HK$9.05 and maintained its "buy" rating.
The research house expects CPCA's (China Passenger Car Association) first week of April
China PV retail numbers to turn positive YoY (+3% YoY to +5% YoY), and further re-rate the
sector.
Meanwhile, given the downturn in 1Q PV sales, Citi now expects NPM (net profit margin)
for GAC-Honda and GAC-Toyota to remain flat YoY at 6.4%/10.7% as demand for these brands
remains solid. In addition, it expects NPM for GAC Motor to decline by 0.5ppt to 6.5% and
believe losses at GAC-Fiat will likely widen to -5.5% (from -5%).
Citi estimated GAC to record Rmb2.5bn NP in 1Q, below consensus. However, it expects the
situation to alleviate throughout the rest of the year as NS6 products start to roll out.
Citi lowered its 2019 EPS forecast by 4.8% to factor in local brands' weaker margin in
2019. (KL)
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02238 GAC GROUP
Nominal 
3.050 -0.070 (-2.244%) Research Report
11/04/2019 14:23
[I-bank focus]Citi lifts GAC Group (02238) to HK$11.08
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