SAIC Motor (600104.CH): 2017 Finale of “Steady Growth”-review of yearly sales February 21, 2018 750

Investment Summary

  • 2017 Finale of “Steady Growth”
  • The trend of better product structure of JV is prominent
  • SAIC`s self-brands still saw robust growth

Investment Thesis

We hold that driven by new product cycle and improving product structure, the company`s better-than-expected growth is worth looking forward to. A relatively high cash dividend rate is expected to continue with its abundant cash flow. We adjust the profit forecast, giving the target price of RMB38.24, equivalent to 12.3/10.8x estimated P/E ratios in 2017/2018. The “Accumulate” rating is given. (Closing price as at 14 Feb 2018)

Forward P/E, P/B trend

21 feb

2017 Finale of “Steady Growth”

According to SAIC`s financial results forecast, in 2017, the Group reported net profit attributable to parent company of RMB34.2 billion, a yoy increase of RMB2.2 billion, or a yoy growth of 7%. After deducting the non-recurrent profit and loss of RMB32.7 billion, the yoy increase is 7.8%. In 2017 SAIC achieved sales of 6.93 million units, a yoy increase of 6.9%. The target set at the beginning of the year has been roughly fulfilled. The sales growth is above the industry average by 5.5 percentage points, showing a strong growth momentum. The profit growth is higher than sales growth, reflecting that the company`s profitability has seen improvement.

The trend of better product structure of JV is prominent

The group`s joint-venture brands showed different sales performance. SAIC Volkswagen achieved sales of 2.063 million units, a yoy increase of 3.06%. SAIC GM achieved a yoy growth of 5.99% to 2 million units. SGM-Wuling achieved sales growth of 0.93% to 2.15 million units. The group has 3 and 4 models, respectively, that are ranked among the top-10 best-selling sedans and SUVs. And 3 MPV models occupied the top three of the year`s bestselling MPV.

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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