[ET Net News Agency, 10 November 2020] Citi Research lowered its target price for
Guangzhou Automobile Group (GAC) (02238) to HK$13.09 from HK$3.85 and upgraded its rating
to "buy" from "sell".
With a stronger sector outlook into 2021 and GAC's rich NEV product cycle, the research
house now lifted its 2020-22 net profit forecasts to Rmb7.3bn/Rmb8.8bn/Rmb11.9bn (22%-65%
higher than previous forecasts).
Citi factored in (1) 169k unit GAC-NEV sales in 2021, up 45% with a total of 7 NEV
models; (2) Trumpchi ICE PV 2021 sales at 36% from a low base; (3) both Toyota/Honda JVs
do not lose market shares in 2021.
Furthermore, Citi recognized the possibility the stock could be further re-rated to
HK$16.5-27.4 level if the market starts to assign NIO & XPEV valuation to distinguish its
strong NEV business from other China SOEs. (KL)