[ET Net News Agency, 19 September 2018] Daiwa Research reviewed its key China auto
sector picks following their 1H results announcements. Overall, the results were largely
in line with expectations.
It thinks investors are mainly concerned about the sales trend for 4Q 2018-2019, for
which the research house anticipates a gradual recovery. If the industry situation
continues to deteriorate, Daiwa believes there is a high likelihood of government support
(reducing purchase taxes).
For Geely (00175), Daiwa views the recent market worries on the retail price discounts
and the Vision model's inventory level as over-estimated, and it believes Geely's outlook
remains robust.
Daiwa sees buying opportunities in companies with strong fundamentals and those
insulated from trade disputes and import tariff cuts. It recommended Geely and Brilliance
China (01114) given their likely strong earnings growth in 2018.
On valuation, Daiwa recommend Guangzhou Auto (02238). Among the component makers, it
recommended Minth (00425) on a likely 2H recovery. (KL)
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02238 GAC GROUP
Nominal 
2.400 +0.070 (+3.004%) Others
19/09/2018 11:30
[I-bank focus]Daiwa sees limited downside for auto sector
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