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Research Report

11/02/2020 15:28

{I-bank focus}JFE reviews China autos on Coronavirus impact

[ET Net News Agency, 11 February 2020] Jefferies Research said 31% of China's auto
production capacities are located in Hubei and Level 2 impacted regions, and wholesale and
production volume could decline 40-50% and 50-60% in 1Q to form the bottom.
The research house said its base case of a sequential recovery in April means 2Q volume
could increase by 112-160% QoQ. This also implies 1H wholesale and production to decline
by 11% and 16% respectively.
Jefferies kept its FY2020 retail volume at +4% on potentially more auto loans (consumer
credit) given a deflated auto financing penetration in FY2018-19 on deleveraging.
Jefferies is cautiously optimistic about the outlook of the self-owned brands as their
low production utilization (40-60%) could be stretched in 2Q-4Q to make up for the 1Q
It revised its target prices and ratings for the automakers and dealers as follows:
Name Rating Target Price
BAIC Motor (01958) BUY HK$5.10 from HK$5.9
Brilliance China (01114) BUY HK$9.20 from HK$10.8
BYD (01211) BUY from HOLD HK$56.50 from HK$37
Dongfeng Group (00489) HOLD HK$6.00
Geely Automobile (00175) BUY HK$17.90 from HK$20.6
Great Wall Motor (02333) BUY HK$7.00
GAC Group (02238) BUY HK$10.50 from HK$12.4
Minth Group (00425) HOLD from BUY HK$28.90 from HK$34.5
Meidong Auto (01268) BUY HK$12.90
Yongda Auto (03669) BUY HK$9.80 from HK$8.80
Zhengtong Auto (01728) HOLD HK$2.70 from HK$3.1
Zhongsheng (00881) UNDERPERFORM HK$24.90 from HK$25.6


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