GAC Group (601238): The performance is slightly higher than the expected performance and the turning point of growth is imminent

GAC Group (601238): The performance is slightly higher than the expected performance and the turning point of growth is imminent

This report reads: The performance is slightly lower 天津夜网 than expected, due to the sales pressure of Chuanqi, leading to a decline in gross profit margin.

8 points.

To 6.

1%, it is expected that after the adjustment of Chuanqi / Fick in place in the fourth quarter of 2019, the overlapping investment income will start to contribute incremental increase, and the turning point of performance growth is imminent.

Investment Highlights: Maintain target price of 13.

7 yuan to maintain the “overweight” level.

Considering that the company’s own brand is affected by the industry’s low economic climate and caused operating pressure to exceed expectations, the company’s EPS forecast for 2019/20/21 is reduced to 0.

70 (-0.

16) / 0.

81 (-0.

18) / 1.

00 (-0.

13) Yuan, with reference to comparable company estimates (SAIC Group 8.

7 times, Great Wall Motor 18.

0 times), considering the growth of Japanese joint ventures, give a certain estimated premium to the company in September 2019.

6x PE with a target price of 13.

7 yuan.

In the third quarter of 2019, the company’s revenue was $ 14.7 billion (ten years -10%), and its net profit attributable to its mother was $ 1.4 billion (one year -52%).Increase.

The company’s net profit attributable to its parent, after deducting investment income, was -11 billion, reaching the quarterly lowest value in the past five years, mainly due to the sales pressure of Chuanqi leading to the decline in gross profit margin.

8 points.

To 6.

1%, reaching a quarterly low of nearly five years.

In Q3 2019, the company’s investment income was 25.

USD 500 million, which is basically the same every year. It is expected that the investment income of Q4 companies in 2019 will increase by more than 20%.

It is expected that in the third quarter of 2019, except for GAC Fick, the investment income contributed by the joint venture brand will increase by more than 10%. Considering that the fourth quarter of 2019 is the turning point of GAC Fick’s performance, it is expected that the growth rate of investment income will increase significantly.

The terminal survey shows that the production and sales adjustments of the independent Chuanqi / GAC Fick have basically been completed, and it is estimated that the turning point of performance growth will be imminent.

The Group has gradually promoted the professional manager system since 2019, and the incentive mechanism has been improved.

In August 2019, the company established the Vehicle Business Headquarters to coordinate research, production, and sales integration of the independent brand business, and made a series of personnel adjustments based on this. It is expected that the performance of subsequent independent brands will improve the driving force advantage.

Risk warning: Chuanqi / Fick’s improvement is less than expected, and equity changes in joint ventures.

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