[ET Net News Agency, 13 February 2020] Daiwa Research lowered its target price for
Guangzhou Automobile Group (GAC)(02238) to HK$10.2 from HK$11.6 and maintained its "buy"
rating.
The research house expects GAC to record robust earnings growth of 12-17% over 2020-21,
on the back of margin improvement for own-brand Trumpchi and stable profit growth for
Japanese JVs. But Daiwa revised down its estimate for GAC's own-brand Trumpchi sales
volume by 4% over 2020-21 due to the novel coronavirus outbreak, which would likely impact
auto demand, particularly in 1Q.
Daiwa said GAC has one factory in Yichang of Hubei province, with an annual capacity of
200k units, which will be more affected by the coronavirus outbreak with potential
longer-than-expected postponement of production resumption. (KL)