Credit Suisse raised its target price for Guangzhou Automobile Group (GAC)(02238) to HK$10.6 from HK$9 and maintained its "outperform" rating.
The research house said Honda's and Toyota's new mid-sized SUVs will support GAC's profit growth in 2020 and 2021. GAC's JVs with both Honda and Toyota are slated to enter the mid-sized SUV segment, with Honda "Breeze" (a sibling version of Honda CRV) in December 2019 and Toyota "Wildlander" (a sibling version of Toyota RAV4) in March 2020.
Due to Honda CRV's/Toyota RAV4's terrific track record (monthly 15k/11k units on average), Credit Suisse is confident that Breeze/Wildlander each will deliver above 10k units monthly, which should meaningfully boost top-line growth and margin expansion.
Credit Suisse revised up its 2020/2021 EPS forecasts by 2.3%/2.7%, with higher margin and volume assumptions for the Toyota/Honda JVs.
19/11/2019 17:22
{I-bank focus}Credit Suisse ups GAC Group (02238) to HK$10.6
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