SWS Research Co. Ltd is a subsidiary of Shenwan Hongyuan Securities 99 East Nanjing Road, Shanghai | +862123297818 www.swsresearch.com Automobiles| In-depth Company Research Bringing China to the World 16 January, 2018 BUY Pooling of resources Initiation of coverage Guangzhou Automobile Group (2238:HK) Market Data: January 15, 2018 Financial summary and valuation Closing Price (HK$) 18.10 2015 2016 2017E 2018E 2019E Price Target (HK$) 24.00 Revenue (Rmbm) 29,418 49,418 62,011 82,512 88,981 HSCEI 12,470 YoY (%) 13.2 68.0 25.5 33.1 7.8 HSCCI 4,594 Net income (Rmbm) 4,212 6,288 10,806 14,044 15,064 YoY (%) 43.1 49.3 71.9 30.0 7.3 52-week High/Low (HK$) 22.05/9.90 EPS (Rmb) 0.65 0.98 1.48 1.93 2.07 Market Cap (USD Mn) 20,843 Diluted EPS (Rmb) 0.65 0.95 1.46 1.90 2.04 Market Cap (HK$ Mn) 162,834 ROE (%) 11.1 14.9 19.1 19.1 17.9 Shares Outstanding (Mn) 7,283 Debt/asset (%) 17.7 18.0 13.9 12.6 11.2 Exchange Rate (RMB-HK$) 0.83 Dividend Yield (%) 0.7 0.5 0.8 1.5 2.5 Price Performance Chart: P/E (x) 23.0 15.4 10.1 7.8 7.3 P/B (x) 2.4 2.2 1.6 1.4 1.2 64.2 30.4 16.9 12.3 11.2 150.0% EV/EBITDA (x) Note: Diluted EPS is calculated as if all outstanding convertible securities, such as convertible preferred shares, convertible 100.0% debentures, stock options and warrants, were exercised. P/E is calculated as closing price divided by each year’s EPS.. 50.0% 0.0% Guangzhou Automobile Group (GAC) primarily engages in the research and development (R&D), -50.0% manufacturing, and sale of passenger vehicles. The firm cooperates with several global carmakers through joint ventures (JVs), which produce vehicles under foreign brands, such as Honda, Toyota, Mitsubishi, Fiat, and Jeep. Since 2010, GAC has successfully launched models under its own brand, GAC HSI Index Trumpchi. We expect the company to achieve solid growth in revenue and profit in 2018E, Source: Bloomberg underpinned by improving product mix and margin expansion. We forecast diluted EPS of Rmb1.46 in 17E (+53.7% YoY), Rmb1.90 in 18E (+30.1% YoY), and Rmb2.04 in 19E (+7.4% YoY). We derive a target Analyst price of HK$24.00 and, with 32.6% upside, initiate coverage with a BUY rating. Alison Zhang A0230517090003 Market share gains. The market share of domestic brands increased 0.7ppt YoY to 43.4% in end- BFR269 November, driven by strong demand for domestic SUVs (+20% YoY in January-November), in particular [email protected] mid-range and high-end SUVs. Japanese brands realised solid sales growth in the first 11 months of 2017 (+12.5% YoY), while Korean and European brands recorded significant sales declines. We expect Japanese brands to gain share in the sedan market in 2018, backed by improving product competitiveness. We believe GAC will benefit from both the growing domestic SUV market and increasing sales of Japanese vehicles, and expect its revenue to grow 33.1% YoY to Rmb82.5bn in 18E. Trumpchi’s improving product mix. Trumpchi sales grew at a Cagr of 46.8% over the past four years, reaching 507k units in 2017, on the back of increasing brand awareness. We expect GAC to step up efforts in the development of advanced technologies and products for its domestic brand. We forecast Trumpchi sales of 679k units in 18E (+34.0% YoY) and 725k units in 19E (+6.7% YoY), driven by Trumpchi GS8’s ramping up sales, the launch of the GM8 model, and GS4’s mid-life facelift. We think The company does not hold any equities GAC will continue to shift its product mix towards higher-end products (GS8, GS7, and GM8), with or derivatives of the listed company mentioned in this report (“target”), but then sales contribution from the three models climbing from 21.3% in 17E to 29.5% in 18E, and blended we shall provide financial advisory average selling price rising 1.4% YoY to Rmb92k in 18E. As such, we expect Trumpchi’s blended gross services subject to the relevant laws and regulations. Any affiliates of the company margin to expand from 17.9% in 16A to 22.3% in 17-18E and 22.4% in 19E. may hold equities of the target, which may exceed 1 percent of issued shares subject to the relevant laws and regulations. The Japanese growth drivers. GAC’s JV with Toyota Motor (7203:JP) suffered from tight capacity in 2014- company may also provide investment 17, its utilisation rate reaching 116% in 2017. As total capacity will increase 26.3% to 480k units in banking services to the target. The Company fulfills its duty of disclosure 2018, following the launch of a new production line, we expect sales volume to reach 505k units in within its sphere of knowledge. The clients 18E (+14.1% YoY) and 528k units in 19E (+4.6% YoY). Thanks to robust sales contribution from may contact [email protected] for Avancier, GAC’s JV with Honda Motor (7267:JP) realised total sales volume of 705k units in 2017 relevant disclosure materials or log into (+10.4% YoY). Due to its rising utilisation rate, from 106% in 2016 to 118% in 2017, we expect sales www.swsresearch.com under disclosure volume to grow 0.6% YoY to 709k units only in 18E and 1.1% YoY to 716k units in 19E. However, given column for further information. The clients shall have a comprehensive its improving product mix, we forecast the JV’s net margin to rise from 6.5% in 17-18E to 7.0% in 19E. understanding of the disclosure and disclaimer upon the last page. 本研究报告仅通过邮件提供给 国投瑞银 国投瑞银基金管理有限公司([email protected]) 使用。1 Initiate with a BUY. Given the firm’s improving product mix and margin expansion, we forecast diluted EPS of Rmb1.46 in 17E (+53.7% YoY), Rmb1.90 in 18E (+30.1% YoY), and Rmb2.04 in 19E (+7.4% YoY). We derive a target price of HK$24.00 and, with 32.6% upside, initiate coverage with a BUY rating. Building Materials | Company Research October16 January 12, 2010 2018 Automobiles| In-depth Company Research 投资要点： 广州汽车集团股份有限公司（简称广汽集团）成立于 2005 年 6 月，业务涵盖整车及零部件研发、 制造、汽车商贸服务、汽车金融等，是国内产业链最为完整的汽车集团之一。目前，广汽集团旗 下共有广汽乘用车、广汽本田、广汽丰田、广汽三菱、广汽菲亚特克莱斯勒、广汽研究院等数十 家知名企业与研发机构。我们预期 2018 年广汽集团将受益于产品结构改善及盈利水平提升，实 现收入利润的稳健增长。我们预计 17 年摊薄 EPS 为人民币 1.46 元（同比增长 53.7%），18 年 EPS 为人民币 1.90 元（同比增长 30.1%），19 年 EPS 为人民币 2.04 元（同比增长 7.4%）。我们采用 分部估值法(SoTP)，给予目标价港币 24.00 元。鉴于 32.6%的上升空间，我们给予首次覆盖买入评 级。 自主及日系品牌份额上升。17 年前 11 月，自主品牌市场占有率同比上升 0.7 个百分点至 43.4%， 主要原因在于自主品牌高端 SUV 需求扩张。自主品牌近年来进步明显，产品竞争力大幅提升，我 们认为自主品牌 SUV 有望向上突破，领先的自主车企将受益于消费升级带来的汽车需求增长。日 系品牌 17 年前 11 月销量同比增长 12.5%，而韩系、法系品牌销量大幅下滑。我们预期，由于产 品力提升，18 年日系品牌仍将获得更多市场份额。我们预期广汽集团将受益于自主及日系品牌 份额提升，实现收入及利润稳健增长。 自主品牌升级。2010 年广汽成功推出自主品牌传祺，随着品牌知名度提高，传祺 2017 年销量达 50.7 万台，4 年复合增长率高达 46.8%。十三五期间，传祺将持续致力于先进技术及产品的研发， 全面实现电动化、国际化、网联化三个方面的重大突破，实现自主品牌事业的跨越式发展。受新 车周期驱动（GS8 产能爬坡，GM8 成功上市，GS4 于 18 年初中期改款），我们预期传祺销量将 达到 18 年 67.9 万台(同比增长 30.4%)，19 年 72.5 万台(同比 6.7%)。同时，由于高端车型占比由 17 年 21.3%升至 18 年 29.5%，传祺产品结构不断改善，平均单价有望升至 9.2 万元（同比增长 1.4%）。因此，我们预期传祺综合毛利率由 16 年 17.9%升至 17-18 年 22.3%，19 年 22.4%。 日系持续发力。2014-2017 年，广汽丰田受制于有限的产能，销量维持较弱增长，2017 年产能利 用率高达 116%。2018 年广汽丰田将新增产能 10 万台/年，总产能扩大 26.3%至 48 万台，产能瓶 颈有望得到解决，满足新车型上市规划。我们预计广汽丰田 18 年实现销量 50.5 万台（同比增长 14.1%），19 年 52.8 万台（同比增长 4.6%）。由于高端 SUV 冠道需求爆发，广汽本田 2017 年实 现销量 70.5 万台（同比增长 10.4%），同时产能利用率由 16 年 106%升至 17 年 118%，产能瓶颈 将制约广汽本田销量增长。我们预计广汽本田 18 年实现销量 70.9 万台（同比增长 0.6%），19 年 71.6 万台（同比增长 1.1%）。然而，考虑到产品结构上移，我们预期广汽本田净利率由 17-18 年 6.5%升至 19 年 7.0%。 首次覆盖，给予买入评级。我们预期 2018 年广汽集团将受益于产品结构改善及盈利水平提升， 实现收入利润的稳健增长。我们预计 17 年摊薄 EPS 为人民币 1.46 元（同比增长 53.7%），18 年 EPS 为人民币 1.90 元（同比增长 30.1%），19 年 EPS 为人民币 2.04 元（同比增长 7.4%）。我们 采用分部估值法(SoTP)，给予目标价港币 24.00 元。鉴于 32.6%的上升空间，我们给予首次覆盖买 入评级。 本研究报告仅通过邮件提供给 国投瑞银 国投瑞银基金管理有限公司([email protected]) 使用。2 Please refer to the last page for important disclosures Page 1 Building Materials | Company Research October16 January 12, 2010 2018 Automobiles| In-depth Company Research GAC at a glance Founded in June 2005, Guangzhou Automobile Group (GAC) is the first state-owned automobile company to be listed on both the Hong Kong Stock Exchange and the Shanghai Stock Exchange. GAC is engaged in the research and development (R&D), manufacturing, and sale of vehicles (automobiles and motorcycles) and auto parts and components, as well as auto trade and financing services, among other businesses. The company has acquired non-bank financial licences for insurance, insurance brokerage, auto financing, and leasing. In 2016, GAC reported total revenue of Rmb49.4bn, of which passenger vehicles sales contributed 68%, and auto trade, aftermarket sales, and logistics services represented 30%, while the remaining 2% were derived from financial services and other businesses. The firm owns or has directly invested in a dozen of subsidiaries and joint ventures (JVs), including Guangzhou Automobile Group Motor (GAC Motor), Guangqi Honda Automobile (GAC Honda), GAC Toyota Motor (GAC Toyota), GAC Fiat Chrysler Automobiles (GAC Fiat), GAC Mitsubishi Motors (GAC Mitsubishi), and GAC Engineering.