[ET Net News Agency, 2 September 2019] Nomura lowered its target price for Guangzhou
Auto (GAC)(02238) to HK$10 from HK$11.5 and maintained its "buy" rating.
The research house said GAC's 2Q/1H net profit were in line with Nomura's estimate. It
lowered its 2019/20 EPS estimates by 14% each to reflect its weaker GPM assumptions for
Trumpchi (4pp lower) and the larger net losses of GAC-Fiat but partly offset by the 5%
higher sales volumes for both GAC-Honda and GAC-Toyota, which we think should continue to
benefit from a healthy new model cycle.
Nomura believes GAC-Honda and GAC-Toyota are set to grow further, with their strong
model line-ups and healthy dealer inventory levels, indicating little pricing and
destocking pressure. (KL)