[ET Net News Agency, 14 May 2018] Goldman Sachs raised its 2018 car retail volume
growth forecast to 3% from 2% as it sees stronger than expected January-April sales growth
at 5.5% yoy.
The demand shift expected last year caused by the end of the purchase tax rebate at the
end of December was lower than Goldman's expectation. However it sees industry utilization
running lower, increasing competition and high sales targets leading to pricing weakness
and declining sector profitability.
Goldman said the removal of limits on foreign investment in the auto industry and
potential lower tariffs on imported cars as a structural risk to the industry as it might
pose uncertainty to the current JV business model and profit pool, and increase
competition.
It refreshed its estimates to factor in its new market forecasts, 1Q results and high
frequency data point checks. Goldman revised its OEM coverage earnings estimates by -16%
to +15% and revised its target prices by -46% to +11%.
Name Rating Target Price
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GAC Group (02238) Buy HK$1721 from HK$25.35
Dongfeng Motor (00489) Neutral HK$8.70 from HK$11.39
Brilliance China (01114) Neutral from Buy HK$13.99 from HK$28.72
Geely Automobile (00175) Buy HK$26.26 from HK$31.44
Great Wall Motor (02333) Sell HK$5.24 from HK$5.88

(KL)