股

票

研 [Table_Title] Company Report: BAIC Motor (01958 HK) Toliver Ma 马守彰

究 (852) 2509 5317 EquityResearch 公司报告： 北京汽车 (01958 HK) [email protected]

28 August 2019 Still[Table_S Undergoingummary] an Overhaul, Maintain "Neutral"

还在调整阶段中，维持“中性”

 BAIC Motor’s ("BAIC" or the "Company") 1H19 net profit decreased by [Table_Rank] 25.9% yoy to RMB2,090 million and missed our expectation. The result Rating: Neutral 公 largely missed due to the worse-than-expected performance from Beijing Maintained

司 Hyundai as vehicle sales decreased 27.3% yoy. In 1H19, share of loss from 评级： 中性 (维持)

invested entities amounted to RMB365 million, a stark contrast from a share 报 of profit of RMB582 million in 1H18. Meanwhile, Beijing Benz profit slightly dropped 1.7% yoy on decreased gross margin by 3.0 ppts due to change in 告 6[Table_Price-18m TP 目标价] : HK$4.44

sales mix. On the other hand, Beijing Brand gross loss narrowed on better Revised from 原目标价: HK$5.00 CompanyReport sales but face pressure from reduced NEV subsidy. Share price 股价: HK$4.220  We revised our net profit forecast in 2019 to 2021 by -13.7%/ 2.7%/ -2.5% in 2019 to 2021, respectively. Our decrease for current year earnings

forecast is due to a downward adjustment of gross margin for both Beijing Benz and Beijing Brand due to change in sales mix. We have also decreased Stock performance volume forecast for Hyundai after underperformance in 1H19. 股价表现

10.0 % of return  Both Beijing Brand and Beijing Hyundai are undergoing an overhaul. Beijing 5.0 Brand will now be without both loss-making self-owned brands (i.e. Wewan 0.0 and BJ) in 2H19. Hyundai is closing down unused capacity. Therefore, we

(5.0)

should see some improvement in 2H19. However, we will remain cautious as (10.0)

证 new products of Beijing Brand are yet to be tested, with sign of slowing down (15.0)

券 告 in 2Q19. Moreover, Beijing Brand margin pressure will persist as NEV (20.0)

subsidy has significantly reduced since June 2019. Meanwhile, Beijing (25.0) 报 研 (30.0)

Hyundai still suffers from a large array of old products. Therefore, we

maintain our "Neutral" rating for BAIC and revise down TP to HK$4.44, (35.0)

究 究

representing 7.1x 2019 PER, 5.3x 2020 PER. (40.0) 报 Aug-18 Nov-18 Feb-19 May-19 Aug-19 研 北京汽车（“北汽”或“公司”） 年 净利润同比增长 至人民币 亿  2019 上半年 25.9% 20.9 HSI Index BAIC MOTOR-H 告 元，差于我们预期。业绩大幅度低于我们预测主要是由于北京现代差于预期的表现，其汽

券

EquityResearch Report 车销量同比下降 27.3%。2019 年上半年，公司录得合资联营公司应占亏损人民币 3.65 亿

证 元，与 2018 年上半年人民币 5.82 亿元的应占利润成鲜明对比。同时，由于销售组合的变 Change[Table_PriceChange] in Share Price 1 M 3 M 1 Y 化，北京奔驰利润同比下降 1.7%，毛利率下降 3.0 个百分点。 另一方面，北京品牌的毛 [Tab 股价变动 1 个月 3 个月 1 年 亏损因销售增加而收窄，但受新能源汽车补贴下调影响而受压。

Abs. %

(19.3) (9.7) (36.3) le_I 绝对变动 %  我们将 2019 年至 20121 年的净利润预测分别调整-13.7%/ 2.7%/ -2.5%。我们对本年度盈 汽 Rel. % to HS Index (10.0) (3.8) (27.2) 车nfo1 利预测的下调是由于北京奔驰和北京品牌的销售组合变化而下调毛利率。我们也因为现代 相对恒指变动 % Avg. Share price(HK$) 汽车在上半年表现不佳而下调销量预测。 4.5 4.8 4.8 及] 平均股价（港元） Source: Bloomberg, Guotai Junan International. 零  北京品牌和北京现代正在进行重大调整。北京品牌将在 2019 年下半年剥离两个亏损的自 部 主品牌（即威旺和 BJ 品牌）。而北京现代正在关闭闲置的产能。因此，我们应该看到下 半年出现一些改善。然而，由于北京品牌的新产品尚未保证持续性，因有迹象显示 件 2019 年第 2 季度销售放缓，我们将保持谨慎态度。由于新能源汽车补贴从 2019 年 6 月起将大 行 幅减少，北京品牌利润率仍将受到压力。同时，北京现代仍然受到大量旧产品销售的拖累。 业 因此，我们维持对北汽的“中性”评级，并下调目标价至 4.44 港元，相当于 7.1 倍 2019 年

市盈率，5.3 倍 2020 年市盈率。 Automobiles & Components Sector AutomobilesComponents & [Table_ Year End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE 年结Profit ] 收入 股东净利 每股净利 每股净利变动 市盈率 每股净资产 市净率 每股股息 股息率 净资产收益率 [Tab 12/31 (RMB m) (RMB m) (RMB) (△ %) (x) (RMB) (x) (RMB) (%) (%) le_I 2017A 134,159 2,253 0.297 (64.6) 11.8 5.376 0.7 0.100 2.8 5.6 nfo2 2018A 151,920 4,429 0.548 84.5 6.8 6.148 0.6 0.185 5.0 9.9 2019F 181,768 4,350 0.552 0.7 6.7 6.514 0.6 0.186 5.0 8.7 中 ] 2020F 199,964 5,822 0.739 33.9 5.0 7.004 0.5 0.249 6.7 10.9 北外 2021F 208,918 6,096 0.774 4.7 4.8 7.517 0.5 0.261 7.0 10.7

京运 [Table_BaseData]Shares in issue (m) 总股数 (m) 8,015.3 Major shareholder 大股东 BAIC Group 42.6% 汽 Market cap. (HK$ m) 市值 (HK$ m) 33,824.6 Free float (%) 自由流通比率 (%) 57.4 输 车 3 month average vol. 3 个月平均成交股数 (‘000) 7,243.0 FY19 Net gearing (%) FY19 净负债/股东资金 (%) Net Cash 52 Weeks high/low (HK$) 52 周高/低 (HK$) 7.100 / 3.870 FY19 Est. NAV (HK$) FY19 每股估值（港元） 4.8

Source: the Company, Guotai Junan International. BAIC Motor BAIC (01958 HK)

See the last page for disclaimer Page 1 of 9

[Table_PageHeader]BAIC Motor (01958 HK)

1H19 RESULTS REVIEW

] 1 r a M t h g i R _ e l b a T [

BAIC Motor’s ("BAIC" or the "Company") 1H19 net profit decreased by 25.9% yoy to RMB2,090 million, which is below

our expectations. Key takeaways are as follows:

 The result largely missed due to the worse-than-expected performance from Beijing Hyundai. In 1H19, share of loss from invested entities amounted to RMB365 million, a stark contrast from a share of profit of RMB582 million in 1H18.

The deteriorated performance is mainly because of sales of Beijing Hyundai decreased 27.3% yoy to 276 thousand units. 28 August2019 Coupled with the challenging auto market and a largely unutilized production capacity, profit margin should drop significantly.

 Beijing Benz profit slightly dropped 1.7% yoy despite strong sales. Sales of vehicle of Beijing Benz increased 11.9% yoy on strong contribution from new A-Class sedan and growth from GLC and E-Class during the period. However, gross margin decreased 3.0 ppts to 28.3% mainly due to change in product mix as A-Class sedan has a lower selling price and an increase in transportation cost.

 Operation of Beijing Brand improved. Sales of vehicle of Beijing Brand increased by 12.2%, as driven by sales of new energy vehicles (“NEV”). During the period, sales of NEV from self-owned brand was 54,000 units, which represents yoy growth of 263.6%, and comprise 65.9% of total brand sales. Due to the better sales mix as more contribution from newer

vehicle Zhidao and Zhixing, gross loss of Beijing Brand also narrowed significantly to -14.4%.] 2 r a M t h g i R _ e l b a T [

 Selling and distribution expenses dropped 1.9% yoy as we think it benefit from the re-classification of transportation expense. Whereas, administrative expense increased by 13.6% yoy, in-line with growth of revenue.

 BAIC made net other losses in 1H19. The losses is mainly caused by the FX loss from forward contracts (1H19: 257.9k vs 1H18: 86.4k), but partly offset by more government grants during the period.

 The Company’s director does not recommend interim dividend.

Table-1: Summary of 1H19 Financial Results of BAIC 1H19 1H18 yoy RMB mn, except per share item Revenue 87,764 76,902 14.1%

Cost of sales (67,155) (56,465) 18.9% (01958 HK)

Gross profit 20,609 20,437 0.8% Other gains and losses (106) 51 -307.8% Selling and distribution expenses (6,215) (6,334) -1.9% Administrative expenses (3,142) (2,766) 13.6%

Finance costs, net (47) (237) -80.2% 北京汽车 Share of profit of jointly ventures and associates (365) 582 -162.7% Operating Profit 10,734 11,732 -8.5% Income tax expenses (3,505) (3,686) -4.9% Profit for the period 7,229 8,046 -10.1%

Owners of the Company 2,090 2,820 -25.9% BAIC Motor Non-controlling interests 5,139 5,225 -1.7% EPS (RMB) 0.25 0.36 -32.3% Source: the Company, Guotai Junan International.

Table-2: Operating Data of BAIC 1H19 1H18 yoy Key Operating Data Beijing Motor sales volume 82,000 73,000 12.3% Beijing Benz sales volume 282,000 252,000 11.9% Beijing Hyundai volume 276,000 380,000 -27.4% Key Ratio Gross profit margin 23.5% 26.6% (3.09) ppts - Beijing Benz 28.3% 31.3% (3.01) ppts - Beijing Brand -14.2% -23.2% n.a. Operating profit margin 12.2% 15.3% (3.03) ppts Net profit margin 8.2% 10.5% (2.23) ppts Distribution costs/Revenue (%) 7.1% 8.2% (1.15) ppts Admin costs/Revenue (%) 3.6% 3.6% (0.02) ppts

Effective tax rate (%) 32.7% 31.4% 1.23 ppts

Source: the Company, Guotai Junan International.

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See the last page for disclaimer Page 2 of 9 [Table_PageHeader]BAIC Motor (01958 HK)

BEIJING BENZ

] 1 r a M t h g i R _ e l b a T [ Strong and sustainable growth is expected, supported by the A-Class sedan and GLC -L. A-Class continue to prove its

popularity as monthly sales volume climbed as high as 7,485 units in May 2019, and YTD sales was 32,713 units. Sales outperformed its two close rivalries (BMW 1-series and FAW Audi A3 Limousine). A-Class has the lowest entry price among localized models, starting from RMB211,800, though still higher than both localized BMW 1-series and Audi A3. The better price performance of A-Class shows competitiveness of the model. As 2019 is the first full year sales for A-Class, we expect

sales to maintain as high level with monthly sales of range of 6,000 to 7,000 units in 2H19. While, next year, the first localized 28 August2019 AMG A35 L are expected. Thought sales volume boost may be limited as should come with highest selling price among other options, we believe it has strategic meaning to the brand in China. On the other hand, we expect GLC-L sales to speed up in the second half due to low base. The current GLC-L was only launch in Oct. 2018, and sales was suppressed in Jul.-Nov. 2018, therefore we expect significant sales growth in this year, assuming sales to maintain above 10,000 units per month. However, major challenges coming from the localized BMW X3.

EQC and GLB is the next driver. The brand new EQC will kick off as the first electric vehicle of the EQ series. The model will first compete with Audi e-tron (import version) and the localized Audi Q2L e-tron, which are expect to launch in 2H19. Meanwhile, the GLB was debut in the Shanghai Auto Show 2019. We expect it will also be localized as the next SUV in 2020.

] 2 r a M t h g i R _ e l b a T [ Figure-1: Beijing Benz Sales Volume by Model Figure-2:1H19 Sales Comparison of BBA Compact Sedan

Units A-class C-class E-class GLA GLC Units 20,000 18,000 35,000 32713 16,000 30,000 14,000 25,000 12,000 21125 10,000 20,000 18,331 8,000

6,000 15,000 4,000 10,000 2,000

0 5,000 (01958 HK)

0

Jul-18 Beijing Benz A- Brilliance BMW 1- FAW Audi A3

Oct-18

Apr-18 Apr-19

Jan-18 Jun-18 Jan-19 Jun-19

Mar-18 Mar-19

Feb-18 Feb-19

Nov-18 Dec-18

Aug-18 Sep-18 May-19 May-18 Class sedan series Limousine

北京汽车 Source: Autohome, Guotai Junan International. Source: the Companies, Guotai Junan International.

BEIJING HYUNDAI

BAIC Motor Sales underperformed and there is recovery weight on 2H19. Sales was below management expectation, completing only 35.6% of management target in 1-7M19. Sales decreased 15.8% yoy in 1H19 due to weak auto demand and dragged by a number of models such as Lingdong and ix25. We believe Hyundai is facing the same challenges as other domestic brands in China, in which new models (i.e. La Festa) contribute additional sales but not enough to compensate the loss in sales. However, more new models are expected in 2H19 and will be key to determine whether Hyundai still have the competitiveness in the market. The La Festa maintain about 9,000 units of monthly sales in the first half, signaling the redesigned outlook and packages is useful. In 2H19, the new generation of ix25 and Sonata will also be launched in China, expecting to further support sales. Meanwhile, new energy vehicles such as the Lingdong PHEV, La Festa EV and Encino EV will also hit the market. The launch of these NEV will help Beijing Hyundai fulfil regulatory requirements.

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See the last page for disclaimer Page 3 of 9 [Table_PageHeader]BAIC Motor (01958 HK)

Figure-3: Beijing Hyundai Market Share Figure-4:Beijing Hyundai Sales and Growth

] 1 r a M t h g i R _ e l b a T [ PV sales Market share 2017 2018 2019 Units Units 2018 yoy 2019 yoy

5.7% 1,200,000 5.7% 5.7% 6.0% 140,000 200.0% 5.5% 5.1% 5.2% 5.0% 5.5% 1,000,000 120,000 150.0% 4.7% 5.0% 800,000 4.2% 100,000 4.0% 4.5% 100.0% 3.8% 600,000 3.4% 4.0% 80,000

50.0% 28 August2019 3.2% 3.5% 400,000 3.0% 3.0% 60,000 3.0% 0.0% 200,000 40,000 2.5% -50.0% 0 2.0% 20,000

0 -100.0%

2005 2006 2007 2009 2010 2011 2012 2014 2015 2016 2017 2013 2018 2008 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1-7M19 Source: CAAM, Guotai Junan International. Source: the Company, Guotai Junan International.

BEIJING BRAND

More restructuring over Senova. Not every new models are successful, and Senova Zhixing and Zhidao are one of those.

] 2 r a M t h g i R _ e l b a T [ Sales are very unstable, with monthly sales range from below 100 to 4,000. We believe the main problem is the lack of product competitiveness. Despite trying to rebrand its product through name changing and adding more advanced features, it has marketed its Zhixing and Zhidao in mass market, with selling price of only RMB50,000 and RMB70,000, respectively. The market of price below RMB100,000, is the most competitive market, flooded with cheap domestic brands. New SUV, Zhida was launched in July 2019. The new SUV feature a new logo different from other Senova models and sharing the same logo as BJEV.

Table-3: Model Pipeline Brand Model Launch date Mode of upgrade Vehicle Types Beijing Brand Zhixing 智行 4Q18 New SUV Zhidao 智道 4Q18 New Sedan

Zhida 智达 Jul. 2019 New SUV

X35 2019 New generation SUV

D50 48V 2019 New Sedan

(01958 HK) Beijing Hyundai New Tucson 1Q19 New generation SUV ix25 3Q19 New generation SUV

Sonata 4Q19 New generation Sedan

Verna 2019 Facelift Sedan

北京汽车 Lingdong 2019 Facelift Sedan

Lingdong PHEV 2Q19 New NEV

La Festa 4Q18 New Sedan

La Festa EV 4Q19 New NEV

Encino EV 4Q19 New NEV

Beijing Benz GLC L 2H18 New Mid-size SUV BAIC Motor A-class sedan 4Q18 New Sedan

C-class 2019 facelift SUV GLB 2020 NEW SUV EQC 2019 / 2020 New NEV

Source: the Company, Autohome, Guotai Junan International.

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See the last page for disclaimer Page 4 of 9 [Table_PageHeader]BAIC Motor (01958 HK)

EARNING FORECASTS

] 1 r a M t h g i R _ e l b a T [

We revised our net profit forecasts by -13.7%/ 2.7%/ -2.5% in 2019 to 2021, respectively. Key changes are as follows:

Beijing Benz: We have refined our sales expectation, expecting sales to grow 18.1%/ 8.7%/ 3.2% yoy in 2019 to 2021, respectively.

Beijing Hyundai: We have also reduced sales forecast for Beijing Hyundai as both old and new models fall short of our 28 August2019 expectation YTD. More new models to launch in 2H19 including the new iX25 and the new Sonata should support sales. However, we expect sales to continue to decrease in 2019 and 2020, with margin under pressure.

Beijing Brand: Beijing Brand was relatively strong in the first half, mainly due to NEV sales. We think sales to maintain as NEV usually has a better sales in 4Q19. Sales should maintain growth in the next few years, thanks to the leading position in NEV market.

Gross margin: Gross margin is expected to gradually increase on strong Beijing Benz contribution, despite slightly drop in 1H19. Future models such as EQC or the GLB should give support to ASP and thus gross margin. On the other hand, we believe that Beijing Brand will remain at gross loss as NEV models will get higher mix, and loss should be maintained due to the

] 2 r a M t h g i R _ e l b a T [ reduction in subsidy.

Table-4: Key Changes in Assumptions New Old Changes 2019F 2020F 2021F 2019F 2020F 2021F 2019F 2020F 2021F Vehicle sales (Units) 1,421,334 1,368,334 1,396,084 1,502,405 1,402,468 1,439,824 -5.4% -2.4% -3.0% Sales volume including: Beijing Brand 179,800 194,300 202,050 190,371 204,434 211,790 -5.6% -5.0% -4.6% Beijing Benz 573,000 623,000 643,000 587,000 633,000 673,000 -2.4% -1.6% -4.5% Beijing Hyundai 642,500 525,000 525,000 699,000 539,000 529,000 -8.1% -2.6% -0.8% Financials (RMB mn)

181,768 199,964 208,918 186,901 203,983 218,702 -2.7% -2.0% -4.5% Revenue

Gross profit margin 23.6% 23.7% 23.8% 24.30% 24.40% 24.70% (0.70)ppt (0.68)ppt (0.89)ppt

Share of profit from JV 143 1,171 1,158 1,007 1,182 1,161 -85.8% -0.9% -0.3%

4,350 5,822 6,096 5,039 5,668 6,253 -13.7% 2.7% -2.5% Net income (Loss) 0.552 0.739 0.774 0.64 0.72 0.794 -13.7% 2.7% -2.5% Basics EPS (RMB) Source: Guotai Junan International.

(01958 HK)

Table-5:Major Financial Data and Forecasts 2017A 2018A 2019F 2020F 2021F Vehicle sales (Units) Beijing Benz 422,558 485,006 573,000 623,000 643,000 北京汽车 yoy 33.3% 14.8% 18.1% 8.7% 3.2% Beijing Brand 236,000 156,000 179,800 194,300 202,050 yoy -48.9% -33.9% 15.3% 8.1% 4.0% Beijing Hyundai 785,006 795,077 642,500 525,000 525,000

yoy -31.3% 1.3% -19.2% -18.3% 0.0% BAIC Motor Fujian Benz 22,000 24,034 26,034 26,034 26,034 yoy 75.0% 9.2% 8.3% 0.0% 0.0% Total 1,465,564 1,460,117 1,421,334 1,368,334 1,396,084 yoy -24.2% -0.4% -2.7% -3.7% 2.0% Financial (RMB mn)

Revenue 134,159 151,920 181,768 199,964 208,918 yoy 15.5% 13.2% 19.6% 10.0% 4.5% Gross profit 35,499 37,007 42,901 47,425 49,747 % 26.5% 24.4% 23.6% 23.7% 23.8% Share of profit from JV and associate -34 904 143 1,171 1,158 yoy -100.8% -2774.8% -84.1% 716.2% -1.1% Shareholders' profit 2,253 4,429 4,350 5,822 6,096 yoy -64.6% 96.6% -1.8% 33.8% 4.7% EPS, basic 0.297 0.548 0.552 0.739 0.774 yoy -64.6% 84.8% 0.7% 33.8% 4.7% Source: the Company, Guotai Junan International.

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See the last page for disclaimer Page 5 of 9 [Table_PageHeader]BAIC Motor (01958 HK)

VALUATION

] 1 r a M t h g i R _ e l b a T [

Currently, both Beijing Brand and Beijing Hyundai are undergoing an overhaul. Beijing Brand will now be without both loss-making self-owned brands (i.e. Wewan and BJ) in 2H19. While Hyundai are closing down unused capacity. Therefore, we should see some improvement in 2H19. However, we will remain cautious as new products of Beijing Brand are yet to be tested, with sign of slowing down in 2Q19. As well as, margin pressure will persist as NEV subsidy significantly reduce since Jun. 2019. Meanwhile, Beijing Hyundai still suffer from large array of old products. Therefore, we maintain our "Neutral" rating for

BAIC and revise down TP to HK$4.44, representing 7.1x 2019 PER, 5.3x 2020 PER. 28 August2019

Figure-5: PER of BAIC Figure-6: PER Range of BAIC

Forward P/E Avg 16.5 (x) +1 S.D. -1 S.D. 15.5 +2 S.D. -2 S.D. (x) BAIC 14.5 20.00 13.5 15.38 12.5 11.5 15.00 10.5 11.05 11.09 10.98 9.5 8.5 7.84 10.00 7.90 7.5 8.21 8.31 8.69 6.5 7.29 5.5 6.14 5.00

4.5 ] 2 r a M t h g i R _ e l b a T [ 3.5 6.28 5.38 5.24 4.93 2.5 4.19 0.00

2015 2016 2017 2018 2019 YTD

Feb-16 Feb-17 Feb-18 Feb-19

Nov-15 Nov-16 Nov-17 Nov-18

Aug-16 Aug-17 Aug-18 Aug-19 Aug-15

May-16 May-18 May-19 May-17 Source: Bloomberg, Guotai Junan International. Source: Bloomberg, Guotai Junan International.

(01958 HK)

北京汽车 BAIC Motor

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See the last page for disclaimer Page 6 of 9 [Table_PageHeader]BAIC Motor (01958 HK)

Table-6: Peers comparison Last price PE PB ROE(%) D/Y(%) EV/

] 1 r a M t h g i R _ e l b a T [ Company Stock Code Currency 17A 18F 19F 20F 17A 18F 19F 20F 18F 18F EBIT18F Dongfeng Motor-H 489 HK HKD 7.23 4.0 4.4 4.3 4.1 0.5 0.4 0.4 0.4 9.7 4.6 DA18.6

Geely Automobile 175 HK HKD 12.10 7.3 11.3 9.3 8.9 2.1 1.9 1.6 1.4 19.7 2.3 5.2

Brilliance China 1114 HK HKD 7.73 5.7 5.3 4.7 4.4 1.1 1.0 0.9 0.7 18.9 3.8 n.a.

Great Wall Mot-H 2333 HK HKD 4.94 7.3 10.4 9.4 8.9 0.8 0.8 0.7 0.7 7.9 4.1 7.0

Qingling Motor-H 1122 HK HKD 1.88 8.8 n.a. n.a. n.a. 0.5 n.a. n.a. n.a. n.a. n.a. n.a.

Byd Co Ltd-H 1211 HK HKD 37.85 34.3 31.6 27.3 25.2 1.8 1.6 1.6 1.5 5.3 0.7 11.2

Guangzhou Auto-H 2238 HK HKD 7.73 6.1 6.7 6.1 5.6 0.9 0.9 0.8 0.7 13.3 5.3 12.5 28 August2019

Baic Motor-H 1958 HK HKD 4.22 6.5 6.8 6.1 5.6 0.6 0.6 0.6 0.6 10.1 5.5 0.8

Weichai Power-H 2338 HK HKD 11.32 8.8 8.7 8.8 8.4 2.0 1.8 1.6 1.4 19.0 4.7 4.1

Sinotruk Hk Ltd 3808 HK HKD 11.96 6.4 7.0 6.8 6.3 1.1 1.1 1.0 0.9 14.8 5.7 2.5

Simple Average 9.5 10.3 9.2 8.6 1.1 1.1 1.0 0.9 13.2 4.1 7.8 Weighted Average 12.0 12.6 11.1 10.4 1.4 1.3 1.1 1.0 12.8 3.6 8.1

Dongfeng Auto-A 600006 CH CNY 4.8 17.3 18.4 17.1 17.7 1.3 n.a. n.a. n.a. 7.1 2.1 n.a.

Great Wall Mo-A 601633 CH CNY 8.4 14.7 17.5 14.5 12.4 1.5 1.4 1.3 1.2 9.1 1.9 7.9

Faw Car Co Ltd-A 000800 CH CNY 9.1 95.5 n.a. n.a. n.a. 1.8 1.8 1.7 1.6 6.3 n.a. n.a.

Saic Motor-A 600104 CH CNY 24.96 8.1 8.2 7.7 7.3 1.2 1.1 1.0 0.9 13.5 5.3 5.9

Chongqing Chan-A 000625 CH CNY 8.28 59.1 n.a. 20.9 15.3 0.9 0.9 0.8 0.8 4.1 1.6 9.5

Weichai Power-A 000338 CH CNY 11.17 10.3 9.8 9.4 8.6 2.3 2.0 1.7 1.5 18.7 4.3 4.1

] 2 r a M t h g i R _ e l b a T [ Beiqi Foton-A 600166 CH CNY 2.11 n.a. 35.2 22.7 18.7 0.9 0.9 0.9 0.8 3.8 0.5 n.a.

Anhui Jianghua-A 600418 CH CNY 4.96 n.a. 16.0 18.2 11.7 0.7 0.7 0.7 0.6 2.9 1.6 5.0

Cnhtc Jinan T-A 000951 CH CNY 15.04 11.1 8.2 7.3 6.1 1.7 1.5 1.3 1.2 17.7 6.0 n.a.

Zhengzhou Yut-A 600066 CH CNY 14.36 13.8 13.2 12.0 11.7 2.0 1.8 1.6 1.5 13.6 4.2 7.6

Xiamen King Lo-A 600686 CH CNY 7.67 29.3 21.5 26.0 29.5 1.4 1.2 1.1 n.a. 5.4 n.a. n.a.

Jiangling Moto-A 000550 CH CNY 15.33 139.4 22.1 13.2 10.5 1.3 1.2 1.2 1.1 9.5 2.9 0.2

Yangzhou Yax-A 600213 CH CNY 9.53 158.8 n.a. n.a. n.a. 11.1 n.a. n.a. n.a. n.a. n.a. n.a.

Zhongtong Bus-A 000957 CH CNY 7.06 114.4 14.7 10.9 9.5 1.5 n.a. n.a. n.a. n.a. n.a. n.a.

Simple Average 50.7 17.0 15.4 0.0 2.2 1.3 1.2 0.0 9.3 3.0 5.7

Weighted Average 27.1 12.4 13.2 11.3 1.7 1.4 1.3 1.2 11.3 2.8 5.1

Nissan Motor Co 7201 JP JPY 647.30 3.4 7.9 14.6 8.3 0.5 0.5 0.5 0.5 3.0 6.1 3.3

Toyota Motor 7203 JP JPY 6,919.00 8.2 10.6 8.6 8.2 1.1 1.0 0.9 0.9 11.6 3.4 11.5

Honda Motor Co 7267 JP JPY 2,484.00 4.2 7.2 6.6 6.1 0.6 0.5 0.5 0.5 7.8 4.7 7.3

(01958 HK)

Mazda Motor 7261 JP JPY 870.40 4.8 8.6 8.9 7.6 0.5 0.4 0.4 0.4 5.3 4.0 3.0

Mitsubishi Heavy 7011 JT JPY 3,930.00 n.a. 13.0 12.2 10.0 0.9 0.9 0.9 0.8 7.4 3.7 6.3

Fuji Heavy Indus 7270 JP JPY 2,874.00 10.0 14.9 9.8 9.1 1.4 1.4 1.3 1.2 13.3 5.0 3.6

Suzuki Motor 7269 JP JPY 4,110.00 8.4 10.4 10.2 9.3 1.4 1.4 1.2 1.1 13.0 1.8 4.3 北京汽车

Hino Motors Ltd 7205 JP JPY 817.00 9.1 8.5 8.7 7.7 0.9 0.9 0.8 0.8 9.7 3.7 5.1

Isuzu Motors 7202 JP JPY 1,109.50 8.3 7.4 7.8 7.2 1.0 0.9 0.8 0.8 10.7 3.4 4.7

Simple Average 7.0 9.8 9.7 8.2 0.9 0.9 0.8 0.8 9.1 4.0 5.5

Weighted Average 7.1 10.3 9.1 8.1 1.0 0.9 0.9 0.8 10.4 3.8 9.1 BAIC Motor

Hyundai Motor 005380 KS KRW 125,000.00 22.2 8.5 7.3 6.7 0.4 0.5 0.5 0.4 5.9 3.5 9.3

Ford Motor Co F US USD 8.82 9.5 6.9 6.3 5.5 1.0 1.0 0.9 0.9 10.0 6.8 2.2

Navistar Intl NAV US USD 22.48 6.5 6.2 6.9 7.3 n.a. n.a. n.a. n.a. (8.4) 0.0 5.4

Paccar Inc PCAR US USD 63.19 10.1 9.3 11.1 10.9 2.5 2.3 2.1 1.7 20.7 4.3 10.0

Volkswagen Ag VOW GR EUR 144.20 6.1 5.3 4.9 4.8 0.7 0.6 0.5 0.5 11.6 4.8 1.8

Bayer Motoren Wk BMW GR EUR 59.64 5.5 7.2 6.3 6.1 0.7 0.7 0.6 0.6 10.4 5.6 2.2

Daimler Ag DAI GR EUR 41.44 6.1 7.8 6.0 5.6 0.7 0.7 0.6 0.6 11.1 6.8 3.0

Man Se MAN GR EUR 48.02 10.5 n.a. n.a. n.a. 1.2 n.a. n.a. n.a. 7.0 n.a. n.a.

Renault Sa RNO FP EUR 50.83 4.2 5.6 4.7 4.1 0.4 0.4 0.4 0.3 7.9 6.2 2.0

Volvo Ab-B VOLVB SS SEK 125.90 10.3 7.5 9.2 9.1 2.1 1.9 1.7 1.6 19.9 5.3 4.9

General Motors C GM US USD 16.72 12.5 4.5 4.9 4.8 4.9 2.8 2.1 1.8 46.9 0.0 4.3

Tata Steel Ltd TATA IN INR 338.05 2.6 3.8 6.7 5.5 0.7 0.6 0.5 0.5 8.4 3.0 5.2 Simple Average 8.5 6.4 6.5 6.2 1.3 1.1 1.0 0.9 12.8 4.3 4.3

Weighted Average 8.0 6.5 6.2 5.9 0.9 0.8 0.8 0.7 12.0 5.2 3.4

Global Simple Average 18.9 11.2 10.4 4.9 1.5 1.2 1.1 0.6 11.8 3.8 5.9 Report

Global Weighted 9.1 9.1 8.3 7.6 1.1 1.0 0.9 0.8 11.4 4.3 6.4 Source:Average the Company, Guotai Junan International.

Company

See the last page for disclaimer Page 7 of 9 [Table_PageHeader]BAIC Motor (01958 HK)

Financial Statements and Ratios

[Table_IncomeStatement] Income Statement [Table_BalanceSheet] ] 1 Balancer a SheetM t h g i R _ e l b a T [

Year end 31 Dec (RMB m) 2017A 2018A 2019F 2020F 2021F Year end 31 Dec (RMB m) 2017A 2018A 2019F 2020F 2021F Total Revenue 134,159 151,920 181,768 199,964 208,918 PPE 42,371 43,218 44,316 43,784 41,935 Cost of sales (98,659) (114,914) (138,867) (152,539) (159,171) Intangible assets 13,739 13,123 12,491 11,658 10,718 Gross profit 35,499 37,007 42,901 47,425 49,747 Interest in associates and JV 14,707 16,186 17,302 19,562 22,062 Land use rights 7,462 7,378 7,214 7,053 6,896 Distribution expenses (11,920) (10,432) (12,906) (14,197) (14,833) Deferred tax assets 7,036 7,926 8,904 9,981 11,165 Administrative expenses (5,007) (6,570) (6,951) (7,647) (7,990) Others 3,294 2,444 2,563 2,503 2,533 Operating Profit Total Non-current Assets 88,609 90,275 92,789 94,541 95,310

18,573 20,005 23,044 25,580 26,924 28 August2019

Share of results of joint ventures Pledged deposit 545 820 683 751 717 (34) 904 143 1,171 1,158 and associates Inventories 16,876 18,963 21,751 23,839 24,903 Other gains, net (1,055) 623 545 600 627 Trade and other receivables 23,985 26,121 33,948 35,161 37,877 Finance costs, net (448) (357) (670) (631) (580) Others 563 466 562 618 645 Profit Before Tax 17,036 21,175 23,063 26,720 28,129 Cash & Cash Equivalents 36,825 35,390 43,457 58,598 67,874 Total Current Assets 78,794 81,759 100,400 118,967 132,016 Income Tax (6,038) (6,904) (7,731) (8,703) (9,181) profit After Tax 10,998 14,271 15,332 18,017 18,948 Total Assets 167,403 172,034 193,190 213,508 227,326

Non-controlling Interest (8,745) (9,842) (10,983) (12,195) (12,852) Trade payables 62,621 67,422 77,168 85,517 88,843 Shareholders' Profit / Loss 2,253 4,429 4,350 5,822 6,096 Bank borrowing 18,478 8,956 8,866 8,778 8,690 Other liabilities 5,962 4,048 12,767 14,947 16,124 Basic EPS 0.297 0.548 0.552 0.739 0.774 Total Current Liabilities 87,061 80,426 98,801 109,242 113,657 Diluted EPS 0.297 0.548 0.552 0.739 0.774 Dividend per share (RMB) 0.100 0.185 0.186 0.249 0.261 LTBank borrowing 13,167 14,907 8,401 8,175 7,817 Deferred tax liabilities 878 758 731 705 647

] 2 r a M t h g i R _ e l b a T [ Others 6,656 6,705 8,046 8,846 9,238 Total Non-current Liabilities 20,701 22,370 17,178 17,726 17,702 [Table_CashFlowStatement] Cash Flow Statement Total Liabilities 107,762 102,796 115,979 126,968 131,359

Year end 31 Dec (RMB m) 2017A 2018A 2019F 2020F 2021F Total Shareholders' Equity 40,836 48,415 51,299 55,158 59,198 EBT 17,036 21,175 23,063 26,720 28,129 Minority Interest 18,805 20,822 25,912 31,383 36,769 Depreciation and amortization 5,848 7,145 7,014 7,007 6,671 Total Equity 59,641 69,238 77,211 86,540 95,967 Finance cost, net 448 357 670 631 580 BPS(RMB) 5.376 6.148 6.514 7.004 7.517 Changes in working capital 2,581 3,409 (564) 5,239 (360)

Share of results of JV and associates 34 (904) (143) (1,171) (1,158) Financial Ratios Change of other operating Items (228) 431 (670) (631) (580) Income taxes paid (6,216) (9,879) (7,829) (8,737) (9,806) 2017A 2018A 2019F 2020F 2021F Cash from Operating Activities 19,503 21,733 21,541 29,058 23,476 Profitability Gross profit margin (%) 26.5 24.4 23.6 23.7 23.8 Net investments in PPE (6,925) (6,441) (6,000) (4,500) (3,000) EBITDAR (%) 17.4 18.9 16.9 17.2 16.9 Net change of prepaid land lease (1,878) (73) 0 0 0 EBIT Margin (%) 13.0 14.2 13.1 13.7 13.7

Net change of intangible assets (2,573) (2,221) (1,656) (1,325) (1,060) Net profit margin (%) 8.2 9.4 8.4 9.0 9.1 (01958 HK) Net change of restricted cash 1,042 (275) 138 (69) 34 ROE (%) 5.6 9.9 8.7 10.9 10.7 Dividend received from JV and ROA (%) 10.4 12.7 13.0 13.5 13.0 associates 3,618 96 72 70 68

Net investments in Asso. and JV (1,131) (623) (1,044) (1,159) (1,411) Growth

Others 1,308 5 680 548 211 北京汽车 Sales volume growth (%) -23.7 -0.4 -2.7 -3.7 2.0 Cash from Investing Activities (6,538) (9,532) (7,812) (6,434) (5,157) Revenue growth (%) 15.6 13.2 19.5 10.0 4.5

EPS (%) (64.6) 84.8 0.7 33.8 4.7 Net change of LT bank loan (3,857) (7,784) 1,712 708 387 BPS (%) 1.7 14.3 6.0 7.5 7.3 Issue of perpetual bond 0 2,653 0 0 0

Issuance of shares 0 1,998 0 0 0 Liquidity and solvency BAIC Motor Dividend paid (2,203) (802) (1,482) (1,466) (1,963) Gearing ratio (%) net cash net cash net cash net cash net cash Others (6,095) (9,766) (5,893) (6,724) (7,466) Cash ratio 0.4 0.4 0.4 0.5 0.6 Cash from Financing Activities (12,154) (13,700) (5,662) (7,483) (9,042) Quick ratio 0.7 0.8 0.8 0.9 0.9

Current ratio 0.9 1.0 1.0 1.1 1.2 Net Changes in Cash 811 (1,499) 8,067 15,141 9,276

Other adjustment (50) 64 0 0 0 Efficiency Cash at Beg of Year 36,064 36,825 35,390 43,457 58,598 Inventory turnover 57 57 57 57 57 Cash at End of Year 36,825 35,390 43,457 58,598 67,874 Days receivable 64 50 57 54 55

Days payable 143 118 118 118 118

Source: the Company, Guotai Junan International.

Report

Company

See the last page for disclaimer Page 8 of 9 [Table_PageHeader]BAIC Motor (01958 HK)

Company[Table_CompanyRatingDefinition] Rating Definition

The Benchmark: Hong Kong Hang Seng Index ] 1 r a M t h g i R _ e l b a T [

Time Horizon: 6 to 18 months

Rating Definition Buy 买入 Relative Performance>15%; or the fundamental outlook of the company or sector is favorable. Accumulate 收集 Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable.

Neutral 中性 Relative Performance is -5% to 5%; 28 August2019 or the fundamental outlook of the company or sector is neutral. Reduce 减持 Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable.

Sell 卖出 Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable.

Sector[Table_ RatingIndustry DefinitionRatingDefinition] The Benchmark: Hong Kong Hang Seng Index Time Horizon: 6 to 18 months Rating Definition Outperform 跑赢大市 Relative Performance>5%;

] 2 r a M t h g i R _ e l b a T [ or the fundamental outlook of the sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform 跑输大市 Relative Performance<-5%; Or the fundamental outlook of the sector is unfavorable.

[DISCLOSURETable_DISCLOSUREOFINTERESTS OF INTERESTS ] (1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report.

(3) Except for KAISA GROUP (01638 HK),GUOTAI JUNAN I (01788 HK),JXR (01951 HK),BANK OF GANSU (02139 HK),JINSHANG BANK

(02558 HK),ZHONGLIANG HLDG (02772 HK),BINHAI INVESTMENT (02886 HK),CAM SCSMALLCAP (03157 HK),HAITIANTIAN (08227 HK),Guotai Junan and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this Research Report.

(4) Guotai Junan and its group companies have had investment banking relationships with the issuer mentioned in this Research Report (01958 HK)

within the preceding 12 months. (5) Guotai Junan and its group companies are not making a market in the securities in respect of the issuer mentioned in this Research Report. (6) Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research Report. There is no officer of the issuer mentioned in this Research Report associated with Guotai Junan and its group companies. 北京汽车

BAIC Motor DISCLAIMER

This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily).

Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan.

Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision.

This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in

any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject

Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction.

Report

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Website: www.gtja.com.hk

Company

See the last page for disclaimer Page 9 of 9