20230502-招银国际-广汽集团-02238.HK-1Q23_earnings_miss_on_gross_margin_4页_833kb

Summary of GAC Group (2238 HK) Q1 2023 Performance Analysis

GAC Group's Q1 2023 earnings report indicates a 15% miss in net profit compared to prior expectations, driven by the lowest gross margin in company history at 2.3% and a high impairment loss of RMB 346mn. Despite Aion's 75% YoY sales volume growth, overall profitability suffered due to factors like a 20% sales volume decline. Analysts maintain a BUY rating with a target price of HK$7.50, up 54% from current price, based on a sum-of-the-parts valuation considering Aion's planned spin-off. Key risks include lower sales volume, margin pressures, and potential sector de-rating.

Financial Highlights

• Q1 2023 Results: Sales volume of 539,875 units, down 11.3% YoY; revenue of HK$26.557 billion, with net profit of RMB 1.5 billion.
• Adjustments: FY23 net profit forecast revised down 7% to RMB 6.6 billion, FY24E reduced by 13%, amid lower gross margin and equity income projections.
• Valuation: Target P/E and P/S multiples set at 6.4x and unchanged, SOTP value HK$7.50 per share.

Analyst Recommendations

• Rating: BUY (maintained) with unchanged target price, emphasizing defensive positioning and focus on Hyper GT's potential to drive margins.
• Risks: Sales decline, industry factors, and volatility noted.

This summary reflects analysis from CMB International Global Markets' equity research report, dated May 2, 2023.