Huachuang Securities·2024-03-31 16:00Investment Rating - The report maintains a "Strong Buy" rating for GAC Group (601238) with a target price of 10.11 CNY / 3.65 HKD [2] Core Views - GAC Group's revenue for 2023 reached 129.7 billion CNY, a year-on-year increase of 18%, while the net profit attributable to shareholders was 4.43 billion CNY, a decrease of 45% [2] - The company plans to implement a share repurchase program of 5-10 billion CNY, which includes repurchasing 1-2 billion CNY of A-shares for employee stock ownership plans and 4-8 billion CNY of H-shares for cancellation [2] - The report highlights that GAC's self-owned brands continue to show upward performance, while joint venture brands face competitive pressure [2] Financial Performance Summary - In Q4 2023, GAC Group reported a net profit of -0.08 billion CNY, compared to 0.1 billion CNY in the same period last year, and a non-recurring net profit of -0.45 billion CNY [2] - The company's revenue in Q4 2023 was 31.5 billion CNY, a year-on-year increase of 6% but a quarter-on-quarter decrease of 13% [2] - The gross margin for the year was 8.2%, down 2.0 percentage points year-on-year and 2.3 percentage points quarter-on-quarter [2] Sales and Production Insights - GAC's total vehicle sales in Q4 2023 reached 240,000 units, a year-on-year increase of 30% [2] - The sales of Aion vehicles increased by 45% year-on-year, reaching 129,000 units [2] - The report notes that GAC's self-owned brands are driving profitability improvements, while joint ventures are under pressure from market competition [2] Future Outlook - The report adjusts the net profit forecasts for 2024-2025 from 7.9 billion CNY and 8.3 billion CNY to 7.1 billion CNY and 7.7 billion CNY, respectively, and introduces a 2026 forecast of 8.4 billion CNY [2] - The target price for A-shares is adjusted to reflect a PE ratio of 15 times for 2024, with a corresponding target price of 10.11 CNY [2] - The report emphasizes that GAC Group is expected to maintain competitive advantages in various segments, including self-owned, hybrid, and electric vehicles [2]