[ET Net News Agency, 9 May 2019] Citi Research lowered its target price for Guangzhou
Automobile Group (GAC)(02238) to HK$8.38 from HK$11.08 and downgraded its rating to
"neutral" from "buy".
The research house said the downgrade reflected (1) local brand weakness to linger into
2H, (2) a total Rmb2.1bn net loss from Fiat JV in 2019, (3) Toyota and Honda JV margins
likely having peaked in 2018 and likely to decline into 2019, (4) 2019-21 FCF to remain
negative, and (5) only a mild auto stimulus in 2019.
After adjusting down Trumpchi GPM assumptions, Citi lowered GAC 2019-21 core EBIT
forecasts to a net loss of Rmb1.56/1.78/1.7bn. After adjusting both GAC local brand and JV
earnings, it also lowered GAC group 2019-21 net profit forecasts to Rmb8.6/9.7/10.4bn with
10% CAGR. (KL)
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02238 GAC GROUP
Nominal 
3.110 -0.050 (-1.582%) Research Report
09/05/2019 14:14
[I-bank focus]Citi downgrades GAC Group (02238) to HK$8.38
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