GAC (2238.HK) – The Epidemic has a Short-term Hurt, But the Effect will be Limited in the Long Run March 11, 2020 202

PSR Recommendation: ACCUMULATE Status: Maintained
Target Price: HKDHKD 9.50

Investment Summary

Sales Volume maintain Steadily in 2019: Japanese JVs Maintained Strong Momentum While Self-Brand Gradually Improved since H2 Domestic automobile market trend was downward through 2019 with an overall decrease of 9%. GAC outperformed the industry due to strong Japanese JV brands, achieving a sales volume of 2.0622 million for the year, down by approximately 4% yoy. The sales volume of GAC Honda was 771,000 units, up by 4% yoy. Among popular vehicle models, average monthly sales of the 10th generation Accord was approximately 20,000 units. Annual sales volumes of both Crider and Vezel exceeded 100,000 units. The sales volume of GAC Toyota for the year was 682,000 units, increasing by 17.6% yoy, which was a lot higher than the average. Hot models like Levin, Camry, CHR, and Highlander were best sellers in respective segments. Compared with that of Honda and Toyota, annual sales volumes of joint venture brands like GAC Fiat and GAC Mitsubishi showed different ranges of decline. Sales volume of GAC Fiat in 2019 was 73,900 units, down by 40.96% yoy, while sales volume of GAC Mitsubishi for the year was 133,000 units, down by 7.64% yoy. Annual sales volume of self-brand GAC Trumpchi was 384,600 units, down by 28.14% yoy. Product upgrade and actively reducing dealer inventory were the theme of 2019. It came to our attention that monthly sales has slightly improved since 2019H2.

About the author

Profile photo of Zhang Jing

Zhang Jing
Phillip Securities (HK)

Bachelor Degree in Tongji University of Engineering; Master Degree in East China Normal University of finance. Currently covering the automobile and air sectors. She has years of experience in investment research and is good at combining analysis for the companies with industry prospects.

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