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02238 GAC GROUP
RTNominal down8.460 -0.040 (-0.471%)
Research Report

19/07/2019 17:40

[I-bank focus]Morgan lowers GSC Group (02238) to HK$10.5

[ET Net News Agency, 19 July 2019] Morgan Stanley lowered its target price for
Guangzhou Automobile Group (GAC)(02238) to HK$10.5 from HK$12 and maintained its
"overweight" rating.
The research house expects GAC's 1H net profit of Rmb5.0-5.3bn, implying 23%-28%
decline, mainly due to weakness in the Trumpchi brand, which saw a 30% sales decline in
1H.
Morgan said sales of GAC Trumpchi fell 41% in 1Q, although the decline narrowed to 17%
in 2Q. However, with the large discounts in May and June to destock China V standard
inventory, Morgan expects further pressure on gross margin for Trumpchi.
Morgan cut its earnings forecast by 14.7% for 2019, mainly reflecting margin pressure
during May and June for both Trumpchi and JV brands. It also cut its earnings forecasts by
14%-15% for 2020-21 as it factored in continued losses from GAC FCA, and lower margins for
GAC Toyota and Honda. (KL)

Remark: Real time quote last updated: 16/09/2019 17:59
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