【行业研究报告】广汽集团-We expect 4Q22 NP to fall on equity income

MaintainBUY.WeprojectGAC’s4Q22netprofittodecline21%YoYtoRMB
1.6bnasweexpectitsgrossprofittofall7%YoYandequityincomefromjoint
ventures(JVs)andassociatestodecline13%YoY.Wearestilloftheviewthat
GAC’svaluationisattractiveanditisadefensiveplayerinavolatilemarket.
Netprofitin4Q22likelytofallYoYandQoQ.WeprojectGAC’s4Q22net
profittofall21%YoYtoRMB1.6bnamid6%YoYdeclineinitstotalsales
profittofall21%YoYtoRMB1.6bnamid6%YoYdeclineinitstotalsales
volume.WeforecastGAC’sgrossmarginin4Q22tobelargelyflatQoQ,as
risingbatterycostsmayoffsetthegreatereconomiesofscalefromhigherAion
sales.WeexpectGAC’s4Q22equityincomefromJVsandassociatesto
decline13%YoY,themainreasonforthedeclineofourprojected4Q22net
profit.SalesvolumeatGACHondafell27%YoYin4Q22.GACToyotaraised
incentivestodealersin2H22inordertoachieveits1mn-unitsalestargetin
2022.
WeprojectsalesvolumeofAiontorise18%YoYinFY23Eamidhigh
inventories.SalesvolumeofAionmorethandoubledinFY22to0.27mnunits,
becomingthefourthbest-sellingNEVbrandinChina.WecalculateAion
increaseditsinventoriesatdealersbyabout57,000unitsin2022,or
equivalenttomorethantwo-monthofitsretailsalesvolume.Therefore,we
projectwholesalevolumeofAiontoonlyrise18%YoYto0.32mnunitsin
FY23E.WeexpectGAC’sgrossmargintowidenby2.1pptsYoYinFY23E
duetothehighersalesvolumeofAionandpossiblebatterypricedrop.
Valuation/Keyrisks.WeprojectGAC’snetprofitinFY23Etodecline5%YoY
toRMB9.2bn(1%lowerthanourpriorforecast),mainlyduetolowerequity
incomefromJVsandassociates.
Weusesum-of-the-parts(SOTP)valuationtofactorinAion’splannedspin-off.
WevalueAionHK$3.8pershare,basedon1.0x(unchanged)FY23EP/S.
WevalueHK$4.2pershareforJVsandassociatesbasedon3.0xourFY23E
P/E,whichisequivalenttoaveryconservativedividenddiscountmodel
assumingequityincometodeclineYoYsignificantlyfromFY25Eandbecome
0inFY30E.Wevalue0forTrumpchi.Accordingly,wemaintainBUYrating
andtargetpriceofHK$8.00.Keyriskstoourratingandtargetpriceinclude
lowersalesvolumeandmarginsespeciallyforAionandasectorde-rating.