Asia Pacific Equity Research 31 October 2016
Overweight BYD Company Limited -H 1211.HK, 1211 HK Another beat Price: HK$51.40 Price Target: HK$75.00
BYD’s 3Q16 result was a moderate beat vs. our/ consensus estimates and China at the higher end of guidance. We raise our 2016E earnings by 7% to Head of Asia Auto Research reflect the beat. We believe the company’s motor battery capacity is one of Nick Lai AC its most valuable assets while fast-growing xEV demand in the China (852) 2800 8543 market would continue to boost BYD’s sales in both passenger car (EV [email protected] and PHEV) and EV bus businesses. Besides policy regulation supporting Bloomberg JPMA LAI
Recap of our thesis/future catalysts: 1) We are bullish on China's NEV 50 HK$ industry and believe this will be a powerful, multi-year structure trend 40 (30% CAGR towards 2020). 2) China government recently announced it 30 will impose a carbon trade scheme and is expected to announce its Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 investigation result on NEV fraud sales soon. We view these as 1211.HK share price (HK$) HSCEI (rebased) structurally positive for leading OEMs such as BYD. 3) We believe YTD 1m 3m 12m industry battery supply will remain tight in the near term. Our view is Abs 24.6% -2.3% 2.7% 5.8% that the value of BYD lies primarily in its battery capability and Rel 22.4% -0.2% -2.1% 15.7% capacity.
3Q16 result highlights: 1) While revenue was up 13%qoq, higher admin expense and tax rate led to a flat 3Q16 NP vs. 2Q16. 2) 3Q16 came in at Rmb1.4bn, the higher end of previous guidance at Rmb1.3-1.48bn. The company is now guiding FY16 NP at Rmb5.0-5.2bn vs. our previous estimate of Rmb4.7bn.
OW, risks: We revised our 2016E earnings by 7% and retain OW on H- shr with PT at HK$75 on SoTP. Risks: unfavorable changes in NEV policy and worse than expected NEV sales.
BYD Company Limited - H (Reuters: 1211.HK, Bloomberg: 1211 HK) Rmb in mn, year-end Dec FY13A FY14A FY15A FY16E FY17E FY18E Company Data Revenue (Rmb mn) 49,768 55,366 77,612 95,365 112,074 120,086 Shares O/S (mn) 915 Net Profit (Rmb mn) 553 434 2,823 5,069 6,324 7,162 Market Cap (Rmb mn) 41,111 EPS (Rmb) 0.23 0.18 1.14 1.95 2.32 2.63 Market Cap ($ mn) 6,065 Revenue growth (%) 12.1% 11.2% 40.2% 22.9% 17.5% 7.1% Price (HK$) 51.40 EPS growth (%) 579.6% (23.9%) 537.9% 70.8% 19.0% 13.2% Free Float(%) 75.4% ROCE 4.0% 3.8% 7.0% 8.7% 9.1% 9.6% 3M - Avg daily vol (mn) 4.47 ROE 2.6% 1.8% 9.8% 12.1% 11.8% 12.2% 3M - Avg daily val (HK$ mn) 233.83 P/E (x) 191.2 251.3 39.4 23.1 19.4 17.1 HSCEI 9515.32 P/BV (x) 4.9 4.3 3.4 2.3 2.2 2.0 Exchange Rate 7.75 EV/EBITDA (x) 30.4 26.2 16.3 13.2 11.8 10.9 Price Target End Date 30-Jun-17 Source: Company data, Bloomberg, J.P. Morgan estimates. See page 7 for analyst certification and important disclosures, including non-US analyst disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
www.jpmorganmarkets.com Nick Lai Asia Pacific Equity Research (852) 2800 8543 31 October 2016 [email protected]
Key catalysts for the stock price: Upside risks to our view: Downside risks to our view: • Further policy support on NEV • NEV units – government hitting the 2020 sales target • Missing estimates – bumpy learning curve for various • Launch of NEV models in 2016-17 – our assumption implies a one-year lag parties including bus companies/ consumers • NEV GM – BYD able to up-sell its NEV to higher • Product hiccups – BYD running into product recall/ price, or cut battery costs faster than expected battery warranty issues, as seen in other auto brands • EV battery/energy storage – BYD starting to sell EV • Competition – global auto brands/ battery makers batteries to other auto makers, and scaling up its solar/ ramping up shipments in China production plants battery/ controller for ESS one-stop shop Key financial metrics FY15A FY16E FY17E FY18E Valuation and price target basis Revenues (LC) 77,612 95,365 112,074 120,086 We retain OW on H-shr and PT at HK$75 (June-17) on SoTP analysis. Revenue growth (%) 40% 23% 18% 7% EBITDA (LC) 11,171 12,931 14,797 16,140 EBITDA margin (%) 14% 14% 13% 13% Tax rate (%) 17% 19% 21% 21% Net profit (LC) 2,823 5,069 6,324 7,162 EPS (LC) 1.1 1.9 2.3 2.6 EPS growth (%) 538% 71% 19% 13% DPS (LC) - 0.4 0.6 0.8 BYD-H share forward PER band BVPS (LC) 13 20 21 22 120 Operating cash flow (LC mn) 3,842 7,300 6,579 9,840 Free cash flow to firm (LC mn) (976) 426 (575) 2,688 100 60 x Interest cover (X) 7.2 9.1 13.5 14.8 80 50 x Net margin (%) 4% 5% 6% 6% Sales/assets (X) 0.7 0.8 0.8 0.8 60 40 x Net debt/equity (%) 87% 35% 39% 37% 30 x 40 ROE (%) 10% 12% 12% 12% 20 x 20
Key model assumptions FY15A FY16E FY17E FY18E 0 NEV PV sales 60,451 119,264 198,681 251,847 EV bus sales 5,375 9,500 12,350 14,203
Source: Bloomberg, Company and J.P. Morgan estimates. Source: Bloomberg, Company and J.P. Morgan estimates.
Sensitivity analysis Impact on EBIT Impact on EPS JPMe vs consensus ( H share) Sensitivity to FY16E FY17E FY16E FY17E Net profit (RMB mn) FY16E FY17E 1% drop in NEV sales volume 3.4% 2.7% -0.9% -0.9% JPMe 5,069 6,324 1ppt drop in bus gross margin 2.5% 1.7% -2.1% -2.1% Consensus 4,706 5,830 diff 8% 8% Source: Bloomberg, Company and J.P. Morgan estimates. Source: Bloomberg, Company and J.P. Morgan estimates. Comparative metrics Company Code JPM Price (LC) Mkt Cap PE(x) PB(x) ROE (%) Div yield Rating Oct 28th (US$ mn) 16E 17E 16E 17E 16E 17E 16E BYD 1211 HK OW 51.4 21,111 23.1 19.4 2.3 2.2 12% 12% 0.8% Batteries Panasonic 6752 JT N 1,087 25,299 13.8 18.7 1.4 1.3 10% 7% 6.0% Samsung SDI 006400 KS OW 93,000 5,576 23.0 17.9 0.6 0.6 3% 3% 1.7% LG Chem. 051910 KS OW 241,500 13,953 13.4 11.8 1.2 1.2 9% 10% 2.1% Electronics BYD-E 285 HK OW 6.3 1,819 9.8 8.3 1.1 1.0 11% 12% 2.0% FIH (1) 2038 HK NC 2.6 2,616 33.1 20.7 0.7 0.7 2% 3% n/a Jabil (1) JBL US NC 21.4 3,975 11.7 10.4 1.6 1.6 10% 5% n/a Auto Tesla TSLA US UW 200.0 29,954 n/a n/a 10.7 11.8 -13% -2% 0.0% Brilliance 1114 HK OW 9.2 5,971 11.5 8.4 1.8 1.5 16% 19% 1.1% Dongfeng Motor 489 HK N 7.8 8,645 4.8 4.7 0.6 0.6 13% 12% 2.9% Great Wall Motor 2333 HK UW 7.7 12,453 7.0 6.0 1.4 1.2 21% 21% 6.5% Geely 175 HK OW 8.2 9,384 14.0 8.9 2.7 2.1 21% 26% 0.4% GAC 2238 HK OW 10.9 17,089 7.3 6.4 1.3 1.2 20% 19% 2.1% Source: Bloomberg, J.P.Morgan.
2 Nick Lai Asia Pacific Equity Research (852) 2800 8543 31 October 2016 [email protected]
Table 1: BYD 3Q16 results summary (China GAAP reporting) RMBmn 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 YoY QoQ Revenue 15,283 16,300 16,911 31,515 20,285 24,664 27,848 65% 13% Sales growth (%) 30% 9% 24% 77% 33% 51% 65% COGS 12,660 13,416 13,814 26,623 16,420 19,169 21,866 58% 14% Gross profit 2,623 2,884 3,097 4,892 3,866 5,495 5,983 93% 9% Gross margin (%) 17% 18% 18% 16% 19% 22% 21% Operating profit 107 355 1,810 904 1,084 1,703 1,655 -9% -3% Operating margin (%) 1% 2% 11% 3% 5% 7% 6% Pre-tax profit 204 627 1,915 1,049 1,149 1,861 1,841 -4% -1% Tax rate 25% 25% 19% 9% 22% 16% 18% Net profit 121 346 1,495 862 851 1,409 1,404 -6% 0% Net margin (%) 1% 2% 9% 3% 4% 6% 5% Net profit growth (%) 911% -1% 5197% 1832% 603% 308% -6% Source: J.P.Morgan estimates
Table 2: BYD earnings revisions 2016E 2017E RMBmn Revised Previous % change Revised Previous % change Revenue 95,365 95,365 0% 112,074 112,074 0% Sales growth (%) 23% 23% 18% 18% COGS 76,909 77,111 0% 89,771 89,771 0% Gross profit 18,455 18,254 1% 22,303 22,303 0% Gross margin (%) 19% 19% 20% 20% Operating profit 8,501 8,299 2% 10,045 10,045 0% Operating margin (%) 9% 9% 9% 9% Pre-tax profit 6,808 6,494 5% 8,673 8,673 0% Tax rate 19% 21% 21% 21% Net profit 5,069 4,725 7% 6,324 6,324 0% Net margin (%) 5% 5% 6% 6% Net profit growth (%) 80% 67% 25% 34% EPS (basic) 1.9 1.8 7% 2.3 2.3 0% Source: Company
Figure 1: BYD-H share PER band Figure 2: BYD-H share PER with +/-1.0 standard deviation 120 200 180 100 60 x 160 140 80 50 x 120 60 40 x 100 30 x 80 40 60 20 x 20 40 20 0 0 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16
Average +1 SD -1 SD
Source: Bloomberg, J.P.Morgan.
Source: Bloomberg, J.P.Morgan.
3 Nick Lai Asia Pacific Equity Research (852) 2800 8543 31 October 2016 [email protected]
Figure 3: BYD-A vs. BYD-H shr price (in HKD) Figure 4: BYD-A premium (% of H-shr) HKD 140% 120 120% 100 100% 80 80% 60% 60 40% 40 20% 20 0% 0 -20%
BYD-H BYD-A
Source: Bloomberg, J.P. Morgan. Source: Bloomberg, J.P. Morgan.
Investment Thesis, Valuation and Risks
BYD Company Limited - H (Overweight; Price Target: HK$75.00) Investment Thesis 1)We are bullish on China's NEV industry and believe this will be a powerful, multi- year structure trend (30% CAGR towards 2020). 2) China government recently announced it will impose a carbon trade scheme and is expected to announce its investigation result on NEV fraud sales soon. These, in our view, will be structurally positive for leading OEMs such as BYD. 3) We believe industry battery supply will remain tight in the near term. Our view is that the value of BYD lies primarily in its battery capability and capacity.
Valuation We remain OW on BYD-H with a Jun-17 PT of HK$75 on SOTP analysis. Our assumptions include: a 25x 2016E P/E for the NEV business (as relevant players in the NEV business globally trade largely at a 20-30x P/E, so we believe 25x is reasonable), 8x for the ICE business, a 1.2x P/BV for the battery business, a 9x P/E for BYD-E and 0.8x for residual book value.
Risks to Rating and Price Target Downside risks include: (1) missing estimates – bumpy learning curve for various parties, including bus companies/consumers; (2) product hiccups – BYD running into product recall/battery warranty issues, as seen at other auto brands; and (3) competition – global auto brands/battery makers ramping up shipments in China production plants.
4 Nick Lai Asia Pacific Equity Research (852) 2800 8543 31 October 2016 [email protected]
BYD Company Limited - H: Summary of Financials Income Statement Ratio Analysis Rmb in millions, year end Dec FY15 FY16E FY17E FY18E Rmb in millions, year end Dec FY15 FY16E FY17E FY18E Revenues 77,612 95,365 112,074 120,086 Gross margin 15.3% 19.4% 19.9% 20.3% Cost of goods sold (65,753) (76,909) (89,771) (95,720) EBITDA margin 14.1% 13.2% 12.9% 13.2% Gross Profit 11,859 18,455 22,303 24,366 Operating margin 6.8% 8.6% 8.7% 9.0% R&D expenses (1,998) (2,624) (3,126) (3,360) Net margin 3.6% 5.3% 5.6% 6.0% SG&A expenses (681) (3,921) (5,655) (6,273) R&D/sales 2.6% 2.8% 2.8% 2.8% Other income 2,573 1,828 2,147 2,313 SG&A/Sales 0.9% 4.1% 5.0% 5.2% Depr. & amortization (5,616) (4,431) (4,752) (5,044) Operating profit (EBIT) 5,555 8,501 10,045 11,096 Sales growth 40.2% 22.9% 17.5% 7.1% EBITDA - Operating profit growth 132.1% 53.0% 18.2% 10.5% Interest income 0 0 0 0 Net profit growth 551.3% 79.5% 24.8% 13.2% Interest expense (1,517) (1,393) (1,072) (1,072) EPS (reported) growth 537.9% 70.8% 19.0% 13.2% Investment income (Exp.) (1,517) (1,393) (1,072) (1,072) Non-operating Income (expense) - - - - Interest coverage (x) 7.2 9.1 13.5 14.8 Earnings before tax 3,795 6,808 8,673 9,724 Tax (657) (1,304) (1,837) (2,038) Net debt to total capital 46.5% 25.8% 27.9% 27.2% Minority interest (315) (435) (511) (523) Net debt to equity 97.1% 37.6% 41.9% 40.6% Exceptional Items 0 0 0 0 Net income (reported) 2,823 5,069 6,324 7,162 Asset turnover 0.7 0.8 0.8 0.8 Net income (adjusted) 2,823 5,069 6,324 7,162 Working capital turns (x) NM NM 16.2 11.7 ROE 9.8% 12.1% 11.8% 12.2% EPS (reported) 1.14 1.95 2.32 2.63 ROIC - EPS (adjusted) 1.14 1.95 2.32 2.63 BVPS 13.04 19.77 20.57 22.44 DPS 0.00 0.37 0.64 0.76 Shares outstanding 2,476 2,602 2,728 2,728 Balance sheet Cash flow statement Rmb in millions, year end Dec FY15 FY16E FY17E FY18E Rmb in millions, year end Dec FY15 FY16E FY17E FY18E Cash and cash equivalents 6,280 11,278 7,124 5,819 Net income 2,823 5,069 6,324 7,162 Accounts receivable 28,818 39,214 49,685 55,850 Depr. & amortization 5,616 4,431 4,752 5,044 Inventories 15,807 15,800 18,633 20,704 Change in working capital (5,167) (4,885) (6,905) (4,514) Others 3,615 4,365 5,072 5,410 Other 570 2,685 2,408 2,148 Current assets 54,519 70,657 80,513 87,783 Cash flow from operations 3,842 7,300 6,579 9,840 LT investments - Capex (6,073) (8,000) (8,000) (8,000) Net fixed assets 38,126 40,425 42,517 44,420 Other investing cash flow (4,663) 0 0 0 Others 9,193 9,193 9,193 9,193 Cash flow from investing (10,736) (8,000) (8,000) (8,000) Total Assets 115,486 134,893 147,697 157,623 Free cash flow (976) 426 (575) 2,688 Liabilities Equity raised/(repaid) 3,200 15,000 0 0 ST Loans 26,413 18,871 17,786 17,337 Debt raised/(repaid) 7,266 (7,000) 0 0 Payables 31,479 36,960 43,174 46,823 Other (1,679) (1,393) (1,072) (1,072) Others 8,219 9,549 10,966 11,630 Dividends paid (37) (909) (1,661) (2,072) Total current liabilities 66,110 65,381 71,926 75,790 Cash flow from financing 8,750 5,699 (2,734) (3,145) Long-term debt 11,230 11,772 12,857 13,306 Net change in cash 2,061 4,998 (4,154) (1,305) Other liabilities 2,116 2,116 2,116 2,116 Beginning cash 3,950 6,011 11,009 6,855 Total Liabilities 79,457 79,269 86,899 91,212 Ending cash 6,011 11,009 6,855 5,550 Shareholder's equity 36,029 55,624 60,798 66,412 Source: Company reports and J.P. Morgan estimates.
5 Nick Lai Asia Pacific Equity Research (852) 2800 8543 31 October 2016 [email protected]
JPM Q-Profile BYD Company Limited Class H (CHINA / Consumer Discretionary) As Of: 29-Oct-2016 [email protected] Local Share Price Current: 51.40 12 Mth Forward EPS Current: 2.11 90.00 3.00 80.00 2.50
70.00 2.00 60.00 1.50 50.00 1.00 40.00 30.00 0.50 20.00 0.00
10.00 -0.50 0.00 -1.00 Jun/02 Jun/05 Jun/08 Jun/11 Jun/14 Mar/03 Mar/06 Mar/09 Mar/12 Mar/15 Sep/01 Dec/03 Sep/04 Dec/06 Sep/07 Dec/09 Sep/10 Dec/12 Sep/13 Dec/15 Sep/16 Jan/03 Jan/05 Jan/07 Jan/09 Jan/11 Jan/13 Jan/15 Sep/01 Sep/03 Sep/05 Sep/07 Sep/09 Sep/11 Sep/13 Sep/15 May/02 May/04 May/06 May/08 May/10 May/12 May/14 May/16
PE (1Yr Forward) Current: 21.3x P/E Relative to China Index Current: 1.80 60.0x 4.00 3.50 50.0x 3.00 40.0x 2.50 2.00 30.0x 1.50 20.0x 1.00 0.50 10.0x 0.00
0.0x -0.50 Jan/03 Jan/05 Jan/07 Jan/09 Jan/11 Jan/13 Jan/15 Sep/01 Sep/03 Sep/05 Sep/07 Sep/09 Sep/11 Sep/13 Sep/15 May/02 May/04 May/06 May/08 May/10 May/12 May/14 May/16 Jan/03 Jan/05 Jan/07 Jan/09 Jan/11 Jan/13 Jan/15 Sep/01 Sep/03 Sep/05 Sep/07 Sep/09 Sep/11 Sep/13 Sep/15 May/02 May/04 May/06 May/08 May/10 May/12 May/14 May/16
Earnings Yield (& Local Bond Yield) Current: 4.69% Dividend Yield (Trailing) Current: 0.84 6.0 18% 12Mth fwd EY China BY Proxy 16% 5.0 14% 12% 4.0 10% 3.0 8% 6% 2.0 4% 1.0 2%
0% 0.0 Jan/03 Jan/05 Jan/07 Jan/09 Jan/11 Jan/13 Jan/15 Sep/01 Sep/03 Sep/05 Sep/07 Sep/09 Sep/11 Sep/13 Sep/15 May/02 May/04 May/06 May/08 May/10 May/12 May/14 May/16 Jan/03 Jan/05 Jan/07 Jan/09 Jan/11 Jan/13 Jan/15 Sep/01 Sep/03 Sep/05 Sep/07 Sep/09 Sep/11 Sep/13 Sep/15 May/02 May/04 May/06 May/08 May/10 May/12 May/14 May/16
ROE (Trailing) Current: 15.22 Price/Book (Value) Current: 3.2x 50.00 25.0x P/B Trailing P/B Forward 45.00 40.00 20.0x 35.00 15.0x 30.00 25.00 10.0x 20.00 15.00 5.0x 10.00 0.0x 5.00 0.00 -5.0x Jan/03 Jan/05 Jan/07 Jan/09 Jan/11 Jan/13 Jan/15 Sep/01 Sep/03 Sep/05 Sep/07 Sep/09 Sep/11 Sep/13 Sep/15 May/02 May/04 May/06 May/08 May/10 May/12 May/14 May/16 Jan/03 Jan/05 Jan/07 Jan/09 Jan/11 Jan/13 Jan/15 Sep/01 Sep/03 Sep/05 Sep/07 Sep/09 Sep/11 Sep/13 Sep/15 May/02 May/04 May/06 May/08 May/10 May/12 May/14 May/16 Summary BYD Company Limited Class H 16571.48 As Of: 29-Oct-16 CHINA 30.58365 TICKER 1211 HK EQUITY Local Price: 51.40 Consumer Discretionary Automobiles EPS: 2.11 Latest Min Max Median Average 2 S.D.+ 2 S.D. - % to Min % to Max % to Med % to Avg 12mth Forward PE 21.32x P/BV (Trailing) 3.19x 1.21 25.00 3.13 4.02 11.82 -3.79 -62% 683% -2% 26% Dividend Yield (Trailing) 0.84 0.00 5.08 0.12 0.86 3.31 -1.58 -100% 505% -85% 3% ROE (Trailing) 15.22 0.38 45.34 14.36 16.67 42.51 -9.16 -97% 198% -6% 10%
Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, JPMorgan Quantitative & Derivative Strategy
6 Nick Lai Asia Pacific Equity Research (852) 2800 8543 31 October 2016 [email protected]
Other Companies Discussed in This Report (all prices in this report as of market close on 28 October 2016, unless otherwise indicated) Brilliance China Automotive (1114.HK/HK$9.19/Overweight), Geely Automobile Holdings Ltd. (0175.HK/HK$8.32[27 October 2016]/Overweight) Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or intervention. Important Disclosures
Market Maker/ Liquidity Provider (Hong Kong): J.P. Morgan Securities (Asia Pacific) Limited and/or J.P. Morgan Broking (Hong Kong) Limited and/or an affiliate is a market maker and/or liquidity provider in the securities of BYD Company Limited - H, Geely Automobile Holdings Ltd., Brilliance China Automotive and/or warrants or options thereon, which are listed or traded on The Stock Exchange of Hong Kong Limited. Client: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies) as clients: Geely Automobile Holdings Ltd.. Other Significant Financial Interests: J.P. Morgan owns a position of 1 million USD or more in the debt securities of BYD Company Limited - H, Geely Automobile Holdings Ltd., Brilliance China Automotive. Company-Specific Disclosures: Important disclosures, including price charts and credit opinion history tables, are available for compendium reports and all J.P. Morgan–covered companies by visiting https://jpmm.com/research/disclosures, calling 1-800-477-0406, or e-mailing [email protected] with your request. J.P. Morgan’s Strategy, Technical, and Quantitative Research teams may screen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-477- 0406 or e-mail [email protected].
BYD Company Limited - H (1211.HK, 1211 HK) Price Chart
95 OW HK$69 Date Rating Share Price Price Target OW HK$65 OW HK$75 (HK$) (HK$) 76 28-Apr-14 OW 46.85 67.00 OW HK$67OW HK$68OW HK$61OW HK$58OW HK$60OW HK$66OW HK$70 25-May-14 OW 41.15 65.00 57 19-Aug-14 OW 51.45 69.00 Price(HK$) 26-Aug-14 OW 49.20 68.00
38 12-Jan-15 OW 29.65 61.00 06-May-15 OW 47.45 58.00 30-Oct-15 OW 48.30 60.00 19 29-Apr-16 OW 44.90 66.00 29-Aug-16 OW 52.25 70.00 0 09-Sep-16 OW 56.40 75.00 Apr Jan Oct Jul Apr Jan Oct Jul 11 12 12 13 14 15 15 16
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Apr 28, 2014.
7 Nick Lai Asia Pacific Equity Research (852) 2800 8543 31 October 2016 [email protected]
Date Rating Share Price Price Target (HK$) (HK$) 26-Sep-10 OW 3.29 4.30 15-Oct-10 OW 3.79 6.20 Geely Automobile Holdings Ltd. (0175.HK, 175 HK) Price Chart 28-Jan-11 OW 3.79 5.40 24-Mar-11 OW 3.00 4.50 18 N HK$3OW HK$4.8 OW HK$8 18-Oct-11 OW 2.01 3.30 29-Feb-12 OW 3.41 5.10 14-Aug-12 OW 2.51 4.00 OW HK$6.2OW HK$4.5 OW HK$6 N HK$3.3OW HK$4.3 OW HK$7 13-Oct-12 OW 3.16 6.00 12 21-Mar-13 OW 3.90 7.00 23-Aug-13 OW 3.86 7.50 Price(HK$) OWOW HK$4.3 HK$5.4OW OWHK$3.3 HK$5.1OW HK$4OWOW HK$7 HK$7.5OW OWHK$5 OWHK$3.7 OWHK$3.5OW HK$5.2 HK$5.1OWOW HK$4.3OW HK$5.5 HK$11 24-Jan-14 OW 3.30 5.00 14-Feb-14 N 3.06 3.30 6 15-Apr-14 N 2.94 3.00 24-Jul-14 OW 3.02 3.70 16-Dec-14 OW 3.12 3.50 02-Feb-15 OW 3.19 4.30 0 19-Mar-15 OW 3.60 4.80 Oct Apr Oct Apr Oct Apr Oct 28-Apr-15 OW 4.44 5.20 06 08 09 11 12 14 15 20-Aug-15 OW 3.00 5.10 Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. 23-Mar-16 OW 3.40 4.30 Initiated coverage Sep 26, 2010. 06-Jul-16 OW 4.27 5.50 27-Jul-16 OW 5.05 7.00 09-Sep-16 OW 6.78 8.00 20-Oct-16 OW 8.30 11.00
Date Rating Share Price Price Target (HK$) (HK$) 27-Mar-07 N 2.13 2.00 11-Mar-08 N 1.52 1.60 22-Apr-08 N 1.38 1.47 29-Jul-08 N 0.89 0.80 Brilliance China Automotive (1114.HK, 1114 HK) Price Chart 05-Apr-09 N 0.56 0.75 30-Oct-09 OW 1.29 1.80 N HK$0.8 OW HK$2.8N HK$3.5N HK$8.3 OW HK$17.5OW HK$15.5OW HK$9 09-Dec-09 OW 2.40 2.80 03-Feb-10 OW 2.14 2.80 27 21-Apr-10 N 2.61 2.80 N HK$1.47 OW HK$2.8NOW HK$3.3 HK$9.6OW HK$8.8OW HK$11OW HK$11OW HK$20OW HK$14OW NHK$18 HK$10N HK$7.5OW HK$13.5 30-Jul-10 N 3.26 3.30 27-Aug-10 N 3.08 3.50 18 N HK$2 N HK$1.6 N HK$0.75OW HK$1.8N HK$2.8OW HK$5.2N HK$7.5OW HK$12.5OW HK$11.6OW HK$8OW HK$13OW OWHK$13 HK$19OWN HK$16.5 HK$10.5N OWHK$7 HK$12 Price(HK$) 14-Sep-10 OW 4.26 5.20 15-Oct-10 OW 6.00 9.60 26-Nov-10 N 6.71 8.30 28-Jan-11 N 5.87 7.50 9 29-Mar-11 OW 6.97 8.80 29-Jul-11 OW 10.18 12.50 29-Feb-12 OW 9.03 11.60 0 29-Mar-12 OW 8.32 11.00 Oct Apr Oct Apr Oct Apr Oct 14-Aug-12 OW 7.37 8.00 06 08 09 11 12 14 15 02-Nov-12 OW 9.62 11.00 Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. 13-Aug-13 OW 10.52 13.00 Initiated coverage Mar 27, 2007. 24-Oct-13 OW 13.66 20.00 20-Mar-14 OW 10.62 13.00 15-Apr-14 OW 12.76 14.00 11-Jul-14 OW 15.70 17.50 05-Aug-14 OW 14.56 19.00 27-Mar-15 OW 14.40 16.50
8 Nick Lai Asia Pacific Equity Research (852) 2800 8543 31 October 2016 [email protected]
28-Apr-15 OW 15.02 18.00 06-May-15 OW 14.32 15.50 10-Jun-15 N 11.32 10.50 22-Aug-15 N 9.30 10.00 21-Feb-16 N 6.64 7.00 17-Mar-16 N 6.88 7.50 04-May-16 OW 7.69 9.00 06-Jul-16 OW 8.10 12.00 27-Aug-16 OW 8.14 13.50
The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stock’s expected total return is compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P. Morgan’s research website, www.jpmorganmarkets.com. Coverage Universe: Lai, Nick YC: BAIC Motor Corp LTD (1958.HK), BYD Company Limited - A (002594.SZ), BYD Company Limited - H (1211.HK), Baoxin Auto Group Limited (1293.HK), Brilliance China Automotive (1114.HK), China ZhengTong Auto Service Holding Limited (1728.HK), DongFeng Motor Co., Ltd. (0489.HK), Fuyao Glass Industry Group - A (600660.SS), Fuyao Glass Industry Group - H (3606.HK), Geely Automobile Holdings Ltd. (0175.HK), Great Wall Motor - A (601633.SS), Great Wall Motor - H (2333.HK), Guangzhou Automobile Group - A (601238.SS), Guangzhou Automobile Group - H (2238.HK), Huayu Automotive Systems - A (600741.SS), Minth Group (0425.HK), Nexteer Automotive Group Limited (1316.HK), Ningbo Joyson Electronic Corp - A (600699.SS), SAIC Motor Corp - A (600104.SS), Sinotruk (3808.HK), Yadea Group Holdings Ltd (1585.HK), Zhengzhou Yutong Bus - A (600066.SS), Zhongsheng Group Holdings (0881.HK)
J.P. Morgan Equity Research Ratings Distribution, as of October 03, 2016 Overweight Neutral Underweight (buy) (hold) (sell) J.P. Morgan Global Equity Research Coverage 42% 46% 12% IB clients* 51% 48% 34% JPMS Equity Research Coverage 42% 50% 8% IB clients* 68% 61% 43% *Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table above.
Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered companies, please see the most recent company-specific research report at http://www.jpmorganmarkets.com, contact the primary analyst or your J.P. Morgan representative, or email [email protected]. Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues. Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-US affiliates of JPMS, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMS, and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account.
9 Nick Lai Asia Pacific Equity Research (852) 2800 8543 31 October 2016 [email protected]
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10 Nick Lai Asia Pacific Equity Research (852) 2800 8543 31 October 2016 [email protected]
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"Other Disclosures" last revised October 8, 2016. Copyright 2016 JPMorgan Chase & Co. All rights reserved. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. #$J&098$#*P
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