20201106-招银国际-上汽集团-600104.SH-Market_sentiment_is_rising_on_A-share_auto_5页_974kb

SAIC Motor (600104 CH) Company Update Summary

Core Content

SAIC Motor (600104 CH) is a major player in the Chinese automotive industry. This report outlines the company's recent financial performance, strategic developments, and analyst recommendations.

Financial Performance

Revenue and Net Profit

• Total Revenue (RMB mn):
  • FY18A: 902,194
  • FY19A: 843,324
  • FY20E: 782,967
  • FY21E: 809,538
  • FY22E: 838,801
• YoY Growth (%):
  • FY18A: 3.62%
  • FY19A: -6.53%
  • FY20E: -7.16%
  • FY21E: 3.39%
  • FY22E: 3.61%
• Net Profit (RMB mn):
  • FY18A: 36,009
  • FY19A: 25,603
  • FY20E: 24,104
  • FY21E: 29,347
  • FY22E: 34,806
• EPS (RMB):
  • FY18A: 3.08
  • FY19A: 2.19
  • FY20E: 2.06
  • FY21E: 2.51
  • FY22E: 2.98
• YoY Growth (%):
  • FY18A: 3.08%
  • FY19A: 2.33%
  • FY20E: 1.94%
  • FY21E: 2.40%
  • FY22E: 2.60%
• Consensus EPS (RMB):
  • FY18A: 4%
  • FY19A: -29%
  • FY20E: -6%
  • FY21E: 22%
  • FY22E: 19%
• P/E (x):
  • FY18A: 8.44
  • FY19A: 11.86
  • FY20E: 12.60
  • FY21E: 10.35
  • FY22E: 8.73
• P/B (x):
  • FY18A: 1.30
  • FY19A: 1.22
  • FY20E: 1.09
  • FY21E: 0.97
  • FY22E: 0.85
• Yield (%):
  • FY18A: 7.04%
  • FY19A: 3.38%
  • FY20E: 3.79%
  • FY21E: 3.57%
  • FY22E: 4.35%
• ROE (%):
  • FY18A: 15.67%
  • FY19A: 10.58%
  • FY20E: 9.12%
  • FY21E: 9.91%
  • FY22E: 10.40%
• Net Gearing (%):
  • FY18A: 17%
  • FY19A: 21%
  • FY20E: 19%
  • FY21E: 17%
  • FY22E: 12%

Key Financial Highlights

• 3Q20 Revenue: RMB214.9bn, up 2.8% YoY
• 3Q20 Net Profit: RMB8.3bn, up 17.4% YoY
• 3Q20 GPM: 11.0%, down 2.4ppt YoY
• 3Q20 Expense Ratio: 9.6%, down 2.3ppt YoY
• 3Q20 Investment Income: RMB8.9bn, up 19% YoY
• 3Q20 Net Profit Forecast: Revised to RMB24.1bn for 2020E, up 55% YoY in 4Q20E
• 2021E Net Profit Forecast: Revised to RMB29.3bn, reflecting strong cost control

Strategic Developments

• SAIC Volkswagen:
  • Launched the mid-term facelift version of Santana in October
  • Released the first BEV based on the MEB platform, ID.4, in October
  • Expected to drive brand recovery, but Skoda brand fell 29% YoY in 3Q20, which may affect short-term performance
• SAIC GM:
  • Excelle (four-cylinder version) sales exceeded 30K units in September
  • Buick sales grew 30% YoY
  • Cadillac sales increased by 75% YoY due to strong performance in the luxury segment
  • Chevrolet declined by 47% YoY, dragging down overall performance
• Market Sentiment: Rising due to the realization of certain catalysts, such as the launch of ID.4 and the potential news on the SAIC Audi project in 2021E
• Target Price: Raised to RMB33.9 (upside of 23.3%), from RMB21.1

Share Performance

• Current Price: RMB27.5
• 1-Month Return: 43.8%
• 3-Month Return: 51.2%
• 6-Month Return: 53.0%
• 12-Month Price Performance:
  • High: RMB27.54
  • Low: RMB16.61

Shareholding Structure

• Shanghai Automotive Industry (Group) Corporation: 71.24%
• Yuejin Automobile Group Corporation: 3.54%
• Hong Kong Central Clearing Company Limited: 3.34%

Analyst Recommendations

• Ratings: BUY
• CMBIS Rating: BUY
• Potential Return: Over 15% over next 12 months

Key Ratios

• Profit Mix (%):
  • Automobile: 74% (FY18A), 73% (FY19A), 72% (FY20E), 72% (FY21E), 71% (FY22E)
  • Auto-parts: 19% (FY18A), 20% (FY19A), 20% (FY20E), 19% (FY21E), 19% (FY22E)
  • Commercial services: 1% (FY18A), 1% (FY19A), 1% (FY20E), 2% (FY21E), 2% (FY22E)
  • Labor services: 4% (FY18A), 4% (FY19A), 5% (FY20E), 5% (FY21E), 5% (FY22E)
  • Financial services: 2% (FY18A), 2% (FY19A), 2% (FY20E), 3% (FY21E), 3% (FY22E)
• P&L Ratios (%):
  • Gross profit margin: 14% (FY18A), 13% (FY19A), 12% (FY20E), 13% (FY21E), 14% (FY22E)
  • Pre-tax margin: 6% (FY18A), 5% (FY19A), 5% (FY20E), 6% (FY21E), 6% (FY22E)
  • Net margin: 4% (FY18A), 3% (FY19A), 3% (FY20E), 4% (FY21E), 4% (FY22E)
  • Effective tax rate: 11% (FY18A), 14% (FY19A), 12% (FY20E), 12% (FY21E), 12% (FY22E)
• Balance Sheet Ratios:
  • Current ratio: 1.09 (FY18A), 1.10 (FY19A), 1.21 (FY20E), 1.25 (FY21E), 1.30 (FY22E)
  • Quick ratio: 0.51 (FY18A), 0.51 (FY19A), 0.59 (FY20E), 0.59 (FY21E), 0.65 (FY22E)
  • Cash ratio: 0.30 (FY18A), 0.28 (FY19A), 0.31 (FY20E), 0.32 (FY21E), 0.39 (FY22E)
  • Debtors turnover days: 25 (FY18A), 26 (FY19A), 24 (FY20E), 23 (FY21E), 21 (FY22E)
  • Total debt / total equity ratio: 175% (FY18A), 182% (FY19A), 136% (FY20E), 126% (FY21E), 116% (FY22E)
  • Net debt / equity ratio: 17% (FY18A), 21% (FY19A), 17% (FY20E), 17% (FY21E), 12% (FY22E)
• Returns (%):
  • ROE: 16% (FY18A), 11% (FY19A), 9% (FY20E), 10% (FY21E), 10% (FY22E)
  • ROA: 7% (FY18A), 5% (FY19A), 5% (FY20E), 6% (FY21E), 6% (FY22E)

Key Points

• The company's earnings have shown improvement in recent quarters, with a notable rise in investment income.
• The new models from SAIC Volkswagen and the performance of Cadillac are expected to boost market sentiment.
• Despite the overall positive trends, the performance of the Skoda brand and Chevrolet may affect the overall results.
• The upgrade to BUY is based on the improved financial performance and strategic developments.
• The financial health of the company is supported by its strong cash position and improved liquidity ratios.