GAC GROUP(601238)2024-10-11 14:13Investment Rating - The investment rating for Guangzhou Automobile Group is Overweight [3][15]. Core Viewpoints - The stock GAC-H rose 19% on October 7, 2024, outperforming the market and H-share peers, driven by potential short position coverage and an expanded A/H share premium of 220% from a previous low of approximately 50% in 2018 [2]. - Key points to monitor include southbound flow due to elevated A/H premium, deepening SOE reform, potential accelerated spin-off of GAC's EV subsidiary Aion, and fundamental vehicle demand supported by capital market rally [2]. Financial Metrics - Price target is set at HK3.81 [3]. - Market capitalization is approximately RMB 72,565 million with an average daily trading value of HK$53 million [3]. - For the fiscal year ending December 2023, net revenue is projected at RMB 129,706 million, with EPS at RMB 0.42 [3]. - The P/E ratio is 7.7, and the dividend yield is 7.4% [3]. Future Projections - Revenue projections for the next few years are as follows: RMB 116,202 million for 2024, RMB 125,991 million for 2025, and RMB 134,303 million for 2026 [3]. - Expected EPS for 2024 and 2025 is RMB 0.31, with a slight increase to RMB 0.35 in 2026 [3]. - The return on equity (ROE) is expected to be 3.9% in 2023, declining to 2.8% in 2024 and 2025, before recovering to 3.1% in 2026 [3].