Dongxing Securities·2024-03-31 16:00Investment Rating - The report has downgraded the investment rating of GAC Group to "Recommended" [2][3][15] Core Views - GAC Group's revenue increased by 17.76% year-on-year to CNY 12,875.73 million in 2023, driven by a significant rise in self-owned vehicle sales, which grew by 39.9% [2][3] - Despite the revenue growth, the net profit attributable to shareholders decreased by 45.11% to CNY 442.89 million due to intensified market competition affecting profit margins [2][3] - The company completed the restructuring of GAC Mitsubishi, which is expected to stabilize investment income from joint ventures despite declining sales in GAC Toyota and GAC Honda [2][3] Summary by Sections Financial Performance - In 2023, GAC Aion's sales reached 480,003 units, up 77.02%, while GAC Passenger Cars sold 406,505 units, a 12.12% increase [2] - The overall gross margin for the company was 6.9%, slightly down from 7.0% in 2022, with a stable expense ratio of 9.5% [2][5] - Investment income fell to approximately CNY 8.66 billion, a 39.5% decline year-on-year, with joint venture income dropping by 41% [2][5] Future Outlook - The report forecasts GAC Group's net profit for 2024-2026 to be CNY 4.87 billion, CNY 5.63 billion, and CNY 6.59 billion respectively, with corresponding EPS of CNY 0.46, CNY 0.54, and CNY 0.63 [2][5] - The company plans to repurchase shares, indicating confidence in future growth, with a commitment to distribute at least 10% of annual distributable profits as cash dividends over the next three years [2][3] Valuation Metrics - The projected P/E ratios for 2024, 2025, and 2026 are 19, 17, and 14 respectively, based on the closing price of A shares on March 29, 2024 [2][5] - The report highlights that the self-owned segment has begun to recover, while GAC's joint ventures still hold advantages in the fuel and hybrid vehicle markets [2][3]