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<Research>Citi Cuts TP of GAC GROUP (02238.HK) to $4.57, Rates Buy
Recommend 7 Positive 12 Negative 7 |
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Citi Research trimmed its target price on GAC GROUP (02238.HK) from $4.75 to $4.57, representing an 8x projected P/E ratio. The broker maintained its Buy rating. Citi expected GAC's joint venture investment income to drop from RMB8.35 billion in 2023 to RMB8.12 billion in 2024, RMB6.69 billion in 2025, and RMB5.86 billion in 2026, reflecting market share loss of the JVs and ongoing price war. Also, based on the lowering of gross profit margin assumptions for GAC's local brands to reflect the intensifying competition, the group's net profit forecast for this year and next year has been lowered by 4%-6% to RMB5.61 billion and RMB5.85 billion, respectively. The report quoted GAC management as saying that the sales volume of JVs this year is predicted to be the same as last year's, with average profit per vehicle as the first priority. The group targeted sales of 500,000 and 650,000 vehicles for the Trumpchi and Aion brands. For exports, the group aimed to sell more than 150,000 cars, with 90,000 for Trumpchi, 40,000 for Aion, and 34,000 for GAC Honda. AAStocks Financial News |
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