[ET Net News Agency, 6 September 2019] BofA Merrill Lynch lowered its target price for
Guangzhou Automobile Group (GAC)(02238) to HK$6.1 from HK$8.7 and downgraded its rating
from "neutral" to "underperform".
The research house said the downgrade reflects that (1) margin pressure on GAC's own
brand (Trumpchi) is likely to hamper earnings and profitability, (2) margin growth at GAC
Toyota could be capped in 2020 after capacity expansion as it is running at above
100% utilization now, (3) GAC Mitsubishi's earnings are deteriorating and the net loss is
widening at GAC FCA in 2019, and (4) 2Q net profit adjusted for one-off items (mainly
government subsidies) was down 63% as growth due to its own brand and GAC FCA's (Fiat
Chrysler Automobiles) loss.
BofAML cut its GPM/OPM assumptions as it does not believe Trumpchi's profitability will
recover any time soon, given brand aging and more sales contributions from NEV, which has
a lower margin amid EV subsidy cuts. It also cut its 2019/20/21 earnings by 8%/16%/18%.
(KL)
|
|
|
|
|
|
|
|
|
|
Super Quote | Detail Quote | Interactive Chart | Transaction | Related News | Related Securities | Company Information | Dividend Records | Short Sell
02238 GAC GROUP
Nominal 
3.050 -0.070 (-2.244%) Research Report
06/09/2019 10:10
{I-bank focus}BofAML downgrades GAC Group (02238) to HK$6.1
| Remark: | Real time quote last updated: 16/04/2024 17:59 |
| Real-time basic market prices of Hong Kong securities are provided by HKEx; a Designated Website authorized by the HKEx Group to provide the Service |