因经营杠杆走软而下调盈利预测；重申强力买入东风pg.jrj.com.cn/acc/Res/CN_RES/INDUS/2016/2/23/47f7adb7-3894-4ab… · 强劲的产品周期），且估值具有吸引力，2016

2016 年 2 月 23 日

中国：汽车证券研究报告

因经营杠杆走软而下调盈利预测；重申强力买入东风 (摘要)

销量强劲但定价/产品结构令人担忧我们维持对 2016-18 年中国整体汽车市场 15%/-5%/ 5.5%的增速预测，最初市场因受到新刺激政策的推动

而加速增长，随后因刺激政策结束而下滑。尽管如

此，我们看到未来三年汽车市场将面临定价疲弱（由

于产能利用率下降）以及产品结构趋于不利（刺激政

策支持的是成本较低的车型）等问题。

下调盈利预测以计入经营杠杆的疲弱我们对覆盖范围内乘用车企业的收入预测与总体销量

增速预测一致，但我们下调了盈利预测，下调幅度最

高达 85%，原因在于竞争激烈和产能利用率下降导致

车企定价疲弱，刺激政策向小型汽车倾斜使得产品结

构不利，经营杠杆将因此下滑。

新能源汽车/SUV 增速超过豪华车/重卡增长最快的两个亮点领域是：(1) 新能源汽车：2015-20 年期间的年均复合增速将为 37%，到 2020 年销量

将达 160 万辆，主要得益于有利的监管政策；(2) SUV：2015-18 年期间年均复合增速将为 19.5%，到

2018 年销量将达 1,180 万辆。相比之下，我们预计

2015-18 年豪华车增速将仅为 5%左右，而重卡市场将

持续萎缩。

短期风险回报具有吸引力；调整目标价格继最近的市场回调之后，H 股汽车股的估值接近 2011年以来的历史低点，表明短期内风险回报有利。

我们更新了目标价格计算中的行业交绘图，即车企的

市净率 – 净资产回报率交绘图和汽车经销商的 EV/GCI vs CROCI/WACC 交绘图，我们对部分股票使用部分

加总法估值以计入其它重要资产或业务的贡献。我们

的目标价格调整幅度在+12% - -36%之间。

将四只股票评级调整为中性；东风集团为首选股

我们重申对东风集团的买入评级（位于强力买入名

单），因其销量增长稳定（尤其是 SUV 车型，得益于

强劲的产品周期），且估值具有吸引力，2016 年预期

市盈率为 4.5 倍，是我们覆盖的 H 股车企的最低水

平。

我们将华晨汽车的评级从卖出上调至中性，因其股价

表现落后之后估值合理。我们将广汽集团和长安 B 的

评级从买入下调至中性，因其估值合理，且由于经营

杠杆低于预期盈利被下调。我们还将威孚 A 评级从买

入下调至中性，原因在于卡车周期疲弱且监管政策实

施力度较弱。

*全文翻译随后提供

相关研究

中国：汽车：刺激政策推出后车市进档加速；东风上调至强力买

入，广汽/长安 A 评级上调至买入，2015 年 10 月 12 日

威孚高科 A (000581.SZ): 因监管薄弱和卡车业务持续低迷而下调

至中性评级，2016 年 2 月 23 日

覆盖范围内评级为买入/卖出的股票概要

*表明该股位于我们的地区强力买入名单。资料来源：Datastream、高华证券研究

杨一朋执业证书编号: S1420511100006 +86(10)6627-3189 [email protected] 北京高华证券有限责任公司

北京高华证券有限责任公司及其关联机构与其研究报告所分析的企业存在业务关系，并且继续寻求发展这些关系。因此，投资者应当考虑到本公司可能存在可能影响本报告客观性的利益冲突，不应视本报告为作出投资决策的唯一因素。有关分析师的申明和其他重要信息，见信息披露附录，或请与您的投资代表联系。

丁妤倩执业证书编号: S1420515060002 +86(10)6627-3327 [email protected] 北京高华证券有限责任公司

北京高华证券有限责任公司投资研究

Valuation Summary - China Auto 2/18/2016 12-month PotentialTicker Company name Currency Rating Close TP up/downside0489.HK Dongfeng HKD Buy* 9.56 11.89 24.3%000625.SZ Changan (A) CNY Buy 14.80 18.18 22.9%1728.HK Zhengtong HKD Buy 2.98 3.56 19.5%600104.SS SAIC CNY Buy 18.75 21.28 13.5%3836.HK Harmony HKD Buy 4.88 5.49 12.5%0881.HK Zhongsheng HKD Sell 3.80 2.51 -33.9%000800.SZ FAW Car CNY Sell 12.76 5.27 -58.7%

2016 年 2 月 23 日中国：汽车

全球投资研究 2

Table of contents

Industry overview: Sales growth stays the same but weak pricing/mix eat into earnings 4

We retain our overall car market growth estimates at 9%/15%/-5%/5.5% for 2015-2018E 4

Capacity utilization to stay low in 2016E then fall further in 2017E, leading to price erosion in late 2016E and 2017E 5

We see compact/small/mini cars and local brands still gaining share on stimulus package 6

We cut sector earnings estimates, however, primarily on weaker operating leverage impact 7

NEV market a bright spot: 37% CAGR over 2015 to 2020E, but 2016 might be slower than 2015 9

SUV segment also growing fast on consumer preference and more new product offerings 10

China luxury car market to maintain a single digit growth in 2015E-18E 13

Heavy Duty Trucks: negative growth to narrow from 2016 with new demand from logistics 15

Valuation: Attractive near-term risk-reward after recent de-rating; Revising target prices 17

P/B-ROE still our methodology for most OEMs; we update our sector plot 18

Relatively attractive risk-reward, with sector trading at historical lows on P/B 19

For our dealer coverage, we still use EV/GCI vs. 2016E-18E average CROCI/WACC 20

Revising earnings estimates in a wide range 24

Dongfeng: Reiterate CL-Buy on stable volume growth and attractive valuation 28

GAC (2238.HK): Down to Neutral after recent outperformance; valuation fair 30

Changan B (200625.SZ): Down to Neutral on EPS revision & upcoming HK-SZ connection 32

Weifu A (000581.SZ): Down to Neutral on weak regulation, trucking stuck in low gear 34

Geely (0175.HK): Down to Neutral on slower growth guidance despite the strong cycle 36

Brilliance (1114.HK): Up to Neutral; Recent fall prices in near-term volume/rebate risks 38

Baoxin (Neutral): We double restructuring premium to 34% on crystallization of acquisition offer 40

Weichai: We increase conglomerate discount to 12% with the higher share of Kion in the valuation 43

Appendix: Global autos valuation comparison 44

Disclosure Appendix 3

The prices in the body of this report are based on the market close of February 18, 2016, unless otherwise stated.

Gao Hua Securities acknowledges the role of Longjin Li of Goldman Sachs in the preparation of this product.

2016 年 2 月 23 日中国：汽车


Exhibit 1: Summary of 2016 industry trends and subsector views

Source: CAAM, CPCA, Company data, Gao Hua Securities Research estimates.

Exhibit 2: Valuation summary – China Auto coverage: We revise our 12-month target prices by minus 36% to plus 12% as we factor in the updates in our PB/ROE and EV/GCI vs CROC/WACC (Directors Cut) sector plots and make some adjustment to company specific discounts/premiums.

Source: Datastream, Gao Hua Securities Research.

Valuation Summary - China Auto 2/18/2016 12 Month PotentialTicker Company Name Currency Rating Close TP-new up/downside Methodology Key risks600104.SS SAIC CNY Buy 18.75 21.28 13.5% PB-ROE: A Share Higher price/margin erosion; weaker local brand sales000800.SZ FAW Car CNY Sell 12.76 5.27 -58.7% PB-ROE: A Share Progress in the restructuring; higher vol. of new models and price000625.SZ Changan (A) CNY Buy 14.80 18.18 22.9% PB-ROE: A Share Lower vol/price of SUV/low-end sedan/minivan200625.SZ Changan (B) HKD Neutral 14.58 15.44 5.9% PB-ROE: H Share Higher/lower vol/price of SUV/low-end sedan/minivan0489.HK Dongfeng HKD Buy* 9.56 11.89 24.3% SOTP Lower price/vol./pricing; weaker JV margin 2333.HK Great Wall (H) HKD Neutral 5.76 5.76 0.0% PB-ROE: H Share Higher/lower price erosion; higher/lower volume in compact SUV/sedan;0175.HK Geely HKD Neutral 3.04 3.11 2.4% SOTP Higher/lower government subsidy; higher/lower vol/price of new models2238.HK GAC HKD Neutral 7.43 6.64 -10.6% PB-ROE: H Share Lower vol. of new models; lower JVs' margin3808.HK Sinotruk HKD Neutral 2.79 2.61 -6.5% PB-ROE: H Share Hhigher/lower vol of HDT domestic/export market2338.HK Weichai (H) HKD Neutral 7.59 6.17 -18.7% SOTP Weaker/stronger than expected export growth; ASP/MS gain on strict Implementation of Euro IV emission stand000338.SZ Weichai (A) CNY Neutral 7.43 7.55 1.6% SOTP Weaker/stronger than expected export growth; ASP/MS gain on strict Implementation of Euro IV emission stand0425.HK Minth HKD Neutral 14.60 12.36 -15.3% PB-ROE: H Share Quicker/slower Japanese brands vol. recovery; higher/lower pricing600418.SS JAC CNY Neutral 10.31 7.78 -24.5% PB-ROE: A Share SUV volume/pricing due to competition; Lower than expected commercial vehicle600741.SS Huayu CNY Neutral 13.89 13.96 0.5% PB-ROE: A Share Higher/lower price erosion of components; weaker/stronger sales volume1293.HK Baoxin HKD Neutral 4.56 3.74 -18.0% DC Higher/lower price/margin erosion of new car sales; restructuring progress1728.HK Zhengtong HKD Buy 2.98 3.56 19.5% DC Lower price/volume of luxury car, esp. BMW, JLR and Volvo.0881.HK Zhongsheng HKD Sell 3.80 2.51 -33.9% DC Stronger price/volume of luxury car; Stronger Japanes brands recovery1114.HK Brilliance HKD Neutral 6.82 6.89 1.0% PB-ROE: H Share Lower vol./price; higher electric vehicle R&D expenditure601633.SS Great Wall (A) CNY Neutral 8.47 6.71 -20.8% PB-ROE: A Share Higher/lower price erosion; higher/lower volume in compact SUV/sedan;600660.SS Fuyao (A) CNY Neutral 13.95 12.36 -11.4% PB-ROE: A Share Stronger/weaker market share gain domestically and globally; price erosion; execution risk; natural gas price flu3606.HK Fuyao (H) HKD Neutral 16.62 13.85 -16.7% PB-ROE: H Share Stronger/weaker market share gain domestically and globally; price erosion; execution risk; natural gas price flu3836.HK Harmony HKD Buy 4.88 5.49 12.5% SOTP Lower luxury vol./pricing; execution risk000581.SZ Weifu (A) CNY Neutral 17.51 18.75 7.1% SOTP Weaker HDT cycle; weaker emission standard enforcement; M&A progress200581.SZ Weifu (B) HKD Neutral 14.18 12.94 -8.7% SOTP Stronger/weaker HDT cycle; stricter/weaker emission standard enforcement; M&A progress

2016 年 2 月 23 日中国：汽车


Industry overview: Sales growth stays the same but weak pricing/mix eat into earnings

We retain our overall car market growth estimates at 9%/15%/-5%/5.5% for 2015-2018E We retain our 2016-2018E overall China car market growth estimates unchanged at 15%/-5%/5.5% — with the lift in 2016 and subsequent fall in 2017 being driven by the introduction of the stimulus package on September 29, 2015 (including a cut in purchase tax from 10% to 5% for cars with engines of 1.6 liters or less; and the subsequent planned withdrawal of that stimulus at the end of 2016 (China: Automobiles: Shifting up a gear after stimulus package; Dongfeng to CL-Buy, GAC/Changan A up to Buy; October 12, 2015)). We believe wholesale volume from OEM to dealers will be strong in 1Q16E as dealers might be more willing to take extra inventory given strong retail growth and relatively low inventory. Dealer inventory fell from c.1.5 months at the beginning of 2015 to c.1.0 months by the end of 2015, the lowest level since Jan 2014.

Exhibit 3: We forecast car market growth of 9%/15%/-5%/5.5% in 2015-2018EChina passenger car market (mn units) and yoy growth (%), 2000-18E

Exhibit 4: We expect strong growth in 1Q16E on low dealer inventory at the end of 2015 Monthly dealer inventory (in month of sales), Jan. 2013-Dec. 2015

Source: IHS, Gao Hua Securities Research.

Source: CADA.

0.8 0.8 1.4 2.3 2.6 3.3 4.3 5.3 5.7

8.6

11.7 12.7 13.6 16.9

19.1 20.8

24.0 22.8 24.0

16.5%

1.7%

80.3%65.7%

13.8%

24.1%32.5%

22.4%

7.4%

51.1%35.4%

8.7% 7.5%

24.1%13.0%9.0%

15.0%-5.0%5.5%

-200%

-150%

-100%

-50%

0%

50%

100%

0

5

10

15

20

25

30

35

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

E

2016

E

2017

E

2018

E

Passenger Car Sales Volume (mn) Passenger Car growth rate (YoY) (RHS)

‐

0.5

1.0

1.5

2.0

2.5

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2013 2014 2015

2016 年 2 月 23 日中国：汽车


Capacity utilization to stay low in 2016E then fall further in 2017E, leading to price erosion in late 2016E and 2017E Medium-term pricing pressure will mainly be driven by the capacity utilization rate, while near-term pricing pressure will come from the level of dealer inventory. We estimate total passenger car production capacity to increase 13%/11% in 2016E/2017E. On the back of our expectation of 15% market growth in 2016E, we think capacity utilization rate will remain flat (80% in 2016E vs 79% in 2015), suggesting price erosion in 2016E might be slightly lower that the 8% in 2015 given low dealer inventory (at c. 1.0 month) at the end of 2015. Nevertheless, we forecast the utilization rate to fall in 2017E with growth falling into negative territory with removal of the stimulus, leading to further price erosion in late 2016E/2017E.

Exhibit 5: We forecast a flattish yoy capacity utilization rate in 2016E China passenger car industrial capacity utilization rate, 2008-17E

Exhibit 6: We see 2016E price erosion of between 4%-8%, based on low dealer inventory at the end of 2015 Monthly price erosion (January 01 = 100) , 2010-2015

Source: Companies data, Gao Hua Securities Research estimates.

Source: ChinaAutoMarket.

72%

85%

94% 94%

84% 86% 83%79% 80%

69%

77%

101%

113%119%

107%112%

107%

95% 93%

77%

62% 64%

72%66%

57% 59% 58% 60%64%

57%

0%

20%

40%

60%

80%

100%

120%

2008

2009

2010

2011

2012

2013

2014

2015

E

2016

E

2017

E

Utilization -total Utilization -JVs Utilization - Locals

86

88

90

92

94

96

98

100

102

104

1‐Jan

Jan

Feb

Mar

Apr

May Jun Jul

Aug

Sep

Oct

Nov Dec

2010 2011 2012 2013 2014 2015

2016 年 2 月 23 日中国：汽车


We see compact/small/mini cars and local brands still gaining share on stimulus package As the purchase tax cut from 10% to 5% applies only to cars with engines of 1.6 liters or less, we expect compact/small/mini cars and local brands (who usually produce smaller cars with smaller engines) to benefit most and as a result gain market share. We see the trend continue until the end of 2016E when the stimulus package will end.

Exhibit 7: Compact/small/mini cars have been gaining share... Compact/small/mini cars’ market share in China locally made passenger car retail volume, 2011Q1-2015Q4

Exhibit 8: As have local brands China locally made passenger car retail volume breakdown by nationality of manufacturer, 2011Q1-2015Q4



79.8%

78.2%77.7% 77.6% 77.8%

77.0% 76.9%

78.7%

80.2%

78.0%

79.0%

80.4% 80.7%

79.7%80.4%

81.3% 81.6%

80.5% 80.5%

82.7%

75%

77%

79%

81%

83%

85%

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

% of mini+small+compact size cars

31.9%29.8%26.1%29.4%30.1%27.0%28.0%32.3%35.3%30.5%30.5%34.0%34.3%30.4%31.8%36.2%39.4%34.2%34.8%40.4%

22.1%20.4%25.1%23.8%22.0%22.6%19.2%15.8%15.7%

17.8%18.1%19.2%15.7%

16.9%16.6%17.5%15.5%

18.6%18.2%16.9%

9.5%10.6%10.8%10.3%9.6%10.1%11.0%11.3%10.4%10.7%10.2%

9.1% 9.9%10.1%9.9%9.6%8.6%8.6%8.0%

8.2%

14.6%14.8%13.8%12.3%14.3%14.1%14.6%14.2%13.9%14.8%14.9%13.4%14.0%14.2%14.5%

12.7%12.8%13.1%13.0%12.7%

21.8%24.5%24.2%24.3%24.0%26.2%27.1%26.4%24.8%26.2%26.3%24.3%26.1%28.4%27.2%24.0%23.6%25.5%26.0%21.8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011

Q1

2011

Q2

2011

Q3

2011

Q4

2012

Q1

2012

Q2

2012

Q3

2012

Q4

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

Chinese Japanese Korean American European

2016 年 2 月 23 日中国：汽车


We cut sector earnings estimates, however, primarily on weaker operating leverage impact In January 2016, eight of the companies under our coverage made preliminary announcements of 2015 net earnings (mostly below our previous estimates), although FY2015 sales volumes were in general in-line with our previous estimates. We attribute the earnings miss to the lower-than expected operating leverage. We believe the lower-than-expected operating leverage in 2015 is due to:

Higher price erosion (8%) than in previous years; which we think will ease in early 2016 but might continue in late 2016/2017E;

Product mix (a greater proportion of smaller and therefore cheaper models sold as a result of stimulus package benefiting 1.6L or smaller engine car); we think this will continue in 2016E.

Exhibit 9: Earnings growth forecast in-line with volume growth forecast on limited operating leverage impact Sales volume YoY growth forecast (%) vs. earnings YoY growth forecast (%)

Note: Earnings forecast of Weichai excludes Kion Group. If we include Kion, 2015-18E earnings growth rates are -71%/+2%/+11%/+9%.

Source: Gao Hua Securities Research

2015E 2016E 2017E 2018E 2015E 2016E 2017E 2018E

SAIC 3% 7% -5% 6% 6% 14% -6% 3%Dongfeng 5% 15% -1% 5% 7% 11% -6% 1%ChangAn 10% 16% -7% 6% 27% 29% -11% 7%GAC 13% 20% 7% 8% 28% 28% 6% 7%Geely 22% 23% 6% 8% 49% 48% 23% 7%Great Wall 17% 10% -7% 7% 0% 1% -15% 1%FAW Car -22% 6% -3% 6% -63% 160% 18% 65%JAC 28% 25% -2% 5% 65% 53% 0% 5%Brilliance -1% 14% 7% 13% -27% 9% 5% 16%Sinotruk -14% 0% 2% 2% -22% -6% 0% -2%Weichai -32% -6% -5% -4% -81% -7% -7% -11%Simple Avg. 3% 12% -1% 6% -1% 31% 1% 9%Simple Avg. (excl. Sinotruk and Weichai) 8% 15% -1% 7% 10% 39% 2% 13%Weighted Avg. (excl. Sinotruk and Weichai) 7% 13% -3% 6% 7% 16% -5% 5%Previous growth forecast-Weighted Avg. (excl. Sinotruk and Weichai) 6% 18% 1% 6% 5% 26% -3% 6%

Sales Volume YoY Growth Forecast (%) Earnings YoY Growth Forecast (%)

2016 年 2 月 23 日中国：汽车


Exhibit 10: Preliminary 2015 earnings indicate our prior estimates were too optimistic Preliminarily announced 2015 earnings vs. Gao Hua estimates

Note: * denote company preliminarily reported data

Source: Company data, Gao Hua Securities Research

Reported net profit (Rmb mn) 2015 GHe Var% 2H2015 GHe Var%Lowerbound Midpoint Higherbound Lowerbound Midpoint Higherbound

Geely 2,146 2,218 2,289 2,911 -24% 741 813 884 1,506 -46%GAC 3,823 4,222 4,620 4,089 3% 1,122 1,521 1,919 1,420 7%Avg. -10% -19%

Reported net profit (Rmb mn) 2015 GHe Var% 4Q2015 GHe Var%Lowerbound Midpoint Higherbound Lowerbound Midpoint Higherbound

Great Wall 8,040 9,077 -11% 1,831 2,868 -36%Changan 9,300 9,700 10,100 9,241 5% 2,559 2,959 3,359 2,500 18%SAIC 29,652 29,537 0% 8,390 8,275 1%JAC 872 1,420 -39% 223 771 -71%FAW 20 55 90 397 -86% (2) 33 68 375 -91%Weichai 1,100 1,375 1,650 1,845 -25% 58 333 608 803 -59%Avg. ‐26% ‐40%

2015* 2H2015*

2015* 4Q2015*

2016 年 2 月 23 日中国：汽车


NEV market a bright spot: 37% CAGR over 2015 to 2020E, but 2016 might be slower than 2015 We believe China New Energy Vehicles (NEV) sales volume trebled yoy in 2013-2015, off a small base, driven by preferential policies around NEV purchase/usage and stricter CO2 emission standards. Although NEV’s secular growth trend remains intact, we do not expect the hyper growth of 2015 to continue in 2016, as:

Although NEV still represents only 1.5% of the entire market and is still coming off a low base, the base in terms of global NEV is higher.

Local governments might take a breather after fulfilling 2013-2015 NEV volume targets;

Potentially stricter subsidy qualification standard, especially in 6-8 meters bus and fleet sales;

Potential complaints on NEV quality, such as battery durability – with the first batch of NEV cars approaching two and three years old — and safety risks on NEV or charging poles, which might be natural as the new technology becomes more visible.

Exhibit 11: NEV secular growth outlook remains intact, although growth rate to slow from 2016E New Energy Vehicle sales volume in k unit and yoy growth in %, 2013-2020E

Exhibit 12: One of major drivers is the stricter CO2 emission standard CO2 emission standard of major automotive market, 2006-2020E

Source: CAAM, Gao Hua Securities Research estimates.

Source: MIIT, DieselNet, Gao Hua Securities Research estimates.

327% 341%

36% 39% 35% 37% 38%

0%

50%

100%

150%

200%

250%

300%

350%

‐

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2013

2014

2015E

2016E

2017E

2018E

2019E

2020E

New energy CV Sales Volume ('000) PHEV Car Sales Volume ('000)

EV Car Sales Volume ('000) Growth Rate (YoY) (RHS)

0

50

100

150

200

250

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

E

2016

E

2017

E

2018

E

2019

E

2020

E

US Europe Japan China

2016 年 2 月 23 日中国：汽车


SUV segment also growing fast on consumer preference and more new product offerings According to ChinaAutoMarket, SUVs’ market share is up to 30% of total passenger car retail volume (locally made, excl. import) in FY2015 vs. 21% in FY2014. We think this segment will continue to grow more rapidly than the overall market at 43%/35%/10%/15% in 2015-18E due to:

Shifting customer preference from Sedan to SUVs.

More product offerings from OEMs, especially in small/sub-compact SUV sectors.

Exhibit 13: We forecast SUV market to keep growing fast over 2015E-18E China SUV market (mn units) and yoy growth (%), 2000-18E

Exhibit 14: China SUV in body type mix grew higher than global average in 2015E Global car market body type volume mix (including import); 2015E

Source: IHS Global Insight, Gao Hua Securities Research estimates.

Source: IHS Global Insight.

Exhibits 15/16/17 show there have been more low-end small SUV products (mainly from local brands) new launches ------ with more

affordable prices and more functions, and these are the major drivers of car market growth in 2015. Meanwhile, we see more

competition in the sedan segment, especially in the biggest compact car sub-segment, with JV sedan prices around Rmb80k-130k

facing direct competition from local brands’ small/compact SUVs (in the same price range but with a more attractive body type and

better equipment). As a result we think the trend of price erosion in sedans being worse than in SUV/MPV will continue in the next

1-2 years.

24 27 56 125 154 183 239 399 589 897 1,637

2,060 2,496

3,647

4,835

6,913

9,333 10,267 11,806

16%

2%

80%66%

14%

24%33%22%

7%

52%

82%

26% 21%46%

33%

43%35%

10% 15%

-250%

-200%

-150%

-100%

-50%

0%

50%

100%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

E

2016

E

2017

E

2018

E

SUV sales volume (in '000 units) Growth rate (YoY) (RHS)

33%13%

41%28% 22%

31%

62%

66%

54%62% 68%

61%

6%21%

5% 10% 10% 8%

0%10%20%30%40%50%60%70%80%90%100%

China Japan US South Korea WestEurope

Global

SUV Sedan MPV

2016 年 2 月 23 日中国：汽车


Exhibit 15: Compact sedan remains the major segment in China FY14 volume mix: A00=mini; A0 = small; A=compact; B= mid-size; C=full-size

Exhibit 16: SUV, esp. the small SUV segment, is fastest growing in China FY15 volume mix: A00=mini; A0 = small; A=compact; B= mid-size; C=full-size

Source: ChinaAutoMarket

Source: ChinaAutoMarket

NB: 55.6%

HB: 12.2%

SUV: 21.1%

MPV: 11.1%

A0 = 12.6%

A = 60.7%

B = 21.7%

C = 5.0%

A00 = 14.3%

A0 = 30.3%

A = 55.5%

A = 75.4%

A0 = 12.6%

A00 = 2.2%

C = 0.5%

B = 10.2%

A = 23.8%

A0 = 52.4%

B = 23.7%

A00 = 0.9%

NB: 50.0%

HB: 9.0%

SUV: 30.0%

MPV: 11.0%

~15%

~5%

A0 = 11.5%

A = 62.1%

B = 21.4%

C = 5.0%

A00 = 11.1%

A0 = 33.4%

A = 55.5%

A = 65.8%

A0 = 22.6%

C = 1.0%

B = 10.0%

A = 34.1%

A0 = 46.1%

B = 19.7%

High growth

2016 年 2 月 23 日中国：汽车


Exhibit 17: SUV market is mainly driven by the local low-end segment in 2015, but we see competition among small/compact local brands becoming intense SUV models by price/length/sales volume (size of bubble)/local (white bubble) or int’l brands (shadowed bubble); A0 = small; A=compact; B= mid-size; Jan-Dec

2015

Source: ChinaAutoMarket; Autome.com; Gao Hua Securities Research.

0

50,000

100,000

150,000

200,000

250,000

300,000

3,500 3,700 3,900 4,100 4,300 4,500 4,700 4,900 5,100

Price (in RMB)

Length (in mm)

SUVSegment A0 Segment A Segment B

Haval 6

Tiguan

S3

CS75

CR-V

Haval H2

CS35

X-TRAIL

Envision

Baojun560

Kuga

GS4

T600

RAV 4

Vezel

ix35

XR-V

Tiggo

BYD S7

ix25

Highlander

Jingyi SUV

New SportageEncore

Haval H1

Audi Q3

V3

Peugeot 3008

Haima S5

Fengshen AX7

GX7

Ecosport

Qashqai

C3-XR

Venutia T70

Besturn X80

Edge

International brand Domestic brand

CS15

CS95

S1

S7

Senova X35

Boyue SUV

Senova X55

CX70SX6

Baojun 530

SR7

To-be-launched new models in 2016

Tiggo 5

New BMW X1

Kadjar

Outlander

2016 年 2 月 23 日中国：汽车


China luxury car market to maintain a single digit growth in 2015E-18E Luxury car demand was weaker than the overall car market in 2015 due to: (i) the high base in 2014 (front loading of car purchase in 2014 as a result of potential license restrictions in some tier 1 & 2 cities) and (ii) slowing economic growth. In addition, the stimulus package (which cuts purchase tax from 10% to 5% for cars with smaller engines) favors the luxury sector least.

Therefore in 4Q15, the luxury sector (top 4 brands) grew only 4.9% yoy vs. the total market’s 16.5%. We see luxury growth underperforming the overall market until the end of 2016E when the stimulus package expires. Nevertheless, from Exhibit 19 we can see that luxury penetration as % of volume mix in total passenger car in China remains lower than global average and so we think the mid-term growth potential for China luxury sector will remain intact. Accordingly we adjust 2016-2018E luxury sector forecast from 13%/0%/5% to 9%/3%7%, respectively.

Exhibit 18: We expect luxury segment to grow 5%/9%/3%/7% in 2015E-18E China luxury car market (000 units) and yoy growth (%), 2000-18E

Exhibit 19: China luxury penetration rate is still below the global average Luxury volume mix in total passenger car market, 2015E

Source: HIS Global Insight, Gao Hua Securities Research.

Source: IHS Global Insight.

In China Mercedes Benz, BMW, Audi, and Jaguar Land Rover (JLR) count for about 75% of total luxury demand. YoY wholesale volume growth of the 4 select brands slowed from more than 20% in 2Q13-1Q14 to low single digit in 4Q2015 gradually (Exhibit 24). Nevertheless, CADA’s dealer inventory data showed that the December 2015 imported car dealer inventory level was down to c.1.5 months, the lowest since March 2014, and so we believe that luxury dealers might be more open to restocking in 2016E.

24 43 53 97 97 111 169 241 302 432

741 971

1,210 1,471

1,800 1,890

2,060 2,121 2,270

82%

22%

84%

-1%

15%

52%43%

25%

43%72%

31% 25% 22%22%

5%

9% 3% 7%

-300%

-250%

-200%

-150%

-100%

-50%

0%

50%

100%

0

500

1000

1500

2000

2500

3000

3500

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

E

2016

E

2017

E

2018

E

Luxury sales volume (in '000 units) Growth rate (YoY) (RHS)

10%

6%

14%

11%

23%

14%

0%

5%

10%

15%

20%

25%

China Japan US SouthKorea

WestEurope

Global

2016 年 2 月 23 日中国：汽车


Exhibit 20: We see monthly luxury volume is stabilizing in 4Q15 Monthly wholesales volume in 000 unit and yoy, BMW+MB+Audi+JLR, Jan 13-Dec 15

Exhibit 21: Mercedes Benz led the volume growth and JLR lagged Monthly wholesales volume in unit and yoy, by brand (BMW/MB/Audi/JLR), Jan 14-Dec 15

Source: Company data.

Source: Company data.

-20.0%

0.0%

20.0%

40.0%

0

30

60

90

120

150

Jan-

2013

Feb-

2013

Mar

-201

3Ap

r-201

3M

ay-2

013

Jun-

2013

Jul-2

013

Aug-

2013

Sep-

2013

Oct

-201

3N

ov-2

013

Dec

-201

3Ja

n-20

14Fe

b-20

14M

ar-2

014

Apr-2

014

May

-201

4Ju

n-20

14Ju

l-201

4Au

g-20

14Se

p-20

14O

ct-2

014

Nov

-201

4D

ec-2

014

Jan-

2015

Feb-

2015

Mar

-201

5Ap

r-201

5M

ay-2

015

Jun-

2015

Jul-2

015

Aug-

2015

Sep-

2015

Oct

-201

5N

ov-2

015

Dec

-201

5

(MB+BMW+Audi+JLR) volume ('000) YoY growth (RHS)

Volume Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 FY2014BMW (incl Mini) 37,137 30,281 40,533 37,765 39,107 40,212 36,884 36,833 37,111 39,512 39,834 40,770 455,979Mercedes-Benz (incl. Smart) 25,603 18,906 26,823 23,872 24,540 25,068 22,238 22,877 26,954 24,506 27,619 30,081 299,087Audi 44,526 32,358 47,636 45,216 48,174 50,756 48,279 47,145 51,614 48,108 52,544 62,576 578,932JLR 11,716 6,909 10,942 10,478 10,880 11,554 8,552 10,104 11,130 7,463 10,683 11,599 122,010Subtotal 118,982 88,454 125,934 117,331 122,701 127,590 115,953 116,959 126,809 119,589 130,680 145,026 1,456,008Volume Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 YTD2015BMW (incl Mini) 40,081 31,089 43,824 37,976 37,457 40,174 34,614 36,314 41,154 41,493 41,090 38,470 463,736Mercedes-Benz (incl. Smart) 29,486 21,018 32,114 28,345 28,820 33,770 30,071 33,370 38,663 34,001 37,332 38,873 385,863Audi 51,249 33,712 48,355 45,296 47,410 47,831 42,267 45,196 53,095 46,763 49,519 60,197 570,890JLR 10,820 5,508 7,198 8,289 7,389 6,242 5,409 6,952 7,788 8,103 8,333 10,443 92,474Subtotal 131,636 91,327 131,491 119,906 121,076 128,017 112,361 121,832 140,700 130,360 136,274 147,983 1,512,963YoY growth Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 YTD2015BMW yoy 7.9% 2.7% 8.1% 0.6% -4.2% -0.1% -6.2% -1.4% 10.9% 5.0% 3.2% -5.6% 1.7%Mercedes-Benz yoy 15.2% 11.2% 19.7% 18.7% 17.4% 34.7% 35.2% 45.9% 43.4% 38.7% 35.2% 29.2% 29.0%Audi yoy 15.1% 4.2% 1.5% 0.2% -1.6% -5.8% -12.5% -4.1% 2.9% -2.8% -5.8% -3.8% -1.4%JLR -7.6% -20.3% -34.2% -20.9% -32.1% -46.0% -36.8% -31.2% -30.0% 8.6% -22.0% -10.0% -24.2%Subtotal yoy 10.6% 3.2% 4.4% 2.2% -1.3% 0.3% -3.1% 4.2% 11.0% 9.0% 4.3% 2.0% 3.9%

2016 年 2 月 23 日中国：汽车


Heavy Duty Trucks: negative growth to narrow from 2016 with new demand from logistics As per CAAM data, Heavy Duty Truck (HDT) wholesale volume fell 26% yoy in FY 2015, and three reasons for continued muted HDT market demand in 2016E:

We expect FAI growth to remain low in 2016E, leading to weak demand for infrastructure-related HDT;

The implementation of stricter emission standard (Euro IV) in early 2015 which might continuously hurt the demand as a result of higher compliance costs (early implementation of Euro V standard in selected areas might push up the compliance cost further); which might partly offset by

Relatively strong logistic demand as a result of robust e-commerce/on-line shopping demands. Hence we cut 2016-18E HDT total market growth from previous 5%/6%/5% to -5%/-4%/-3%.

Exhibit 22: We expect total HDT market to keep shrinking marginally in 2016-18E China HDT market (000 units) and yoy growth (%), 2000-18E

Exhibit 23: Slowdown in GDP and FAI growth add uncertainty around the HDT market China GDP, fixed investment, HDT market yoy growth, 2010-2018E

Source: CAAM, Gao Hua Securities estimates.

Source: CAAM, Goldman Sachs Global Investment Research, Gao Hua Securities estimates.

83 147

245 256 371

237 307

495 496 605

970 856

603

774 774

573 544 522 507

73%77.4%67.0%

4.2%

45.0%

-36.2%

29.9%

60.9%

0.3%

22.0%

60.3%

-11.8%

-29.6%

28.4%

0.0%

-26.0%

-5.0% -4.0%-3.0%

-100%

-60%

-20%

20%

60%

100%

0

200

400

600

800

1000

1200

1400

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

E

2016

E

2017

E

2018

E

HDT Sales Volume HDT yoy growth rate

-60%

-30%

0%

30%

60%

90%

0%

2%

4%

6%

8%

10%

12%

2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E

GDP growth

GDP component - Fixed investment yoy growth

HDT yoy growth (RHS)

2016 年 2 月 23 日中国：汽车


Exhibit 24: GDP growth is slowing in China GDP yoy growth vs. HDT yoy sales growth

Exhibit 25: FAI growth is also slowing in China FAI yoy growth vs. HDT yoy sales growth

Source: CAAM, CEIC, NBS, Goldman Sachs Global Investment Research, Gao Hua Securities Research.

Source: CAAM, CEIC, NBS, Goldman Sachs Global Investment Research, Gao Hua Securities Research.

Exhibit 26: Property development growth is also slowing Property development yoy growth vs. HDT yoy sales growth

Exhibit 27: E-commerce growth rate to remain high, though, at 20%-40% E-commerce transaction volume yoy growth vs. HDT yoy sales growth

Source: CAAM, CEIC, NBS, Goldman Sachs Global Investment Research, Gao Hua Securities Research

Source: CAAM, CEIC, NBS, Goldman Sachs Global Investment Research, Gao Hua Securities Research

0%

2%

4%

6%

8%

10%

12%

14%

16%

‐60%

‐40%

‐20%

0%

20%

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60%

80%

100%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015E

2016E

2017E

2018E

HDT yoy growth rate GDP yoy growth rate (RHS)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

‐60%

‐40%

‐20%

0%

20%

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60%

80%

100%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

E

2016

E

2017

E

2018

E

HDT yoy growth rate FAI yoy growth rate (RHS)

0%

5%

10%

15%

20%

25%

30%

‐60%

‐40%

‐20%

0%

20%

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60%

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100%

2000

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2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015E

2016E

2017E

2018E

HDT yoy growth rateProperty under development yoy growth rate (RHS)

0%

20%

40%

60%

80%

100%

120%

‐60%

‐40%

‐20%

0%

20%

40%

60%

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100%

2000

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2007

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2011

2012

2013

2014

2015E

2016E

2017E

2018E

HDT yoy growth rateE‐commerce transactions volume yoy growth rate (RHS)

2016 年 2 月 23 日中国：汽车


Valuation: Attractive near-term risk-reward after recent de-rating; Revising target prices

Since our last update on 12 Oct, 2015, our A/H share auto coverage price first rebounded 10%/5% on news of the stimulus package then fell 22%/16% recently along with the market as a whole. We update our sector valuation for A and H coverage (off-shore, including B-share) in this report. Our 12-month target prices change in a broad range of minus 36.1% to plus 11.6%.

Exhibit 28: Since Oct 12 update, our A share coverage was up by 10% then down by 22% A share coverage average price performance vs. CSI300

Exhibit 29: While H share coverage up 5% then down 16% H share coverage average price performance vs. MSCI - China

Source: Datastream.

Source: Datastream.

50

60

70

80

90

100

110

10/1

2/2

01

5

10/1

9/2

01

5

10/2

6/2

01

5

11

/2/2

015

11

/9/2

015

11/1

6/2

01

5

11/2

3/2

01

5

11/3

0/2

01

5

12

/7/2

015

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01

5

12/2

1/2

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5

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01

5

1/4

/20

16

1/1

1/2

016

1/1

8/2

016

1/2

5/2

016

2/1

/20

16

2/8

/20

16

2/1

5/2

016

CSI300 A share coverage average

50

60

70

80

90

100

110

10

/12

/20

15

10

/19

/20

15

10

/26

/20

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/2/2

015

11

/9/2

015

11

/16

/20

15

11

/23

/20

15

11

/30

/20

15

12

/7/2

015

12

/14

/20

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12

/21

/20

15

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/28

/20

15

1/4

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1/1

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016

1/1

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016

1/2

5/2

016

2/1

/20

16

2/8

/20

16

2/1

5/2

016

MSCI - China H share coverage average

2016 年 2 月 23 日中国：汽车


P/B-ROE still our methodology for most OEMs; we update our sector plot We continue to use P/B-ROE as our primary valuation methodology for the majority of our coverage companies because of its consistently high correlation with share price movements over time (current R-squared at 0.5456/0.8165 for A/H shares). We continue to use 2016E P/B vs. 2016E-18E average ROE.

Exhibit 30: Among the A shares, we believe SAIC/Changan A is undervalued and FAW Car is overvalued P/B (X) 2016E vs. 2016E-18E average ROE, auto sector, A-share

Exhibit 31: Among the off-shore stocks, we believe Dongfeng is undervalued relative to the sector P/B (X) 2016E vs. 2016E-18E average ROE, auto sector, H-share

Note: Dotted line is the previous valuation line; solid line is the current mark-to-market line, which is the new valuation line we suggest.

Note: Dotted line is the previous valuation line; solid line is the current mark-to-market line, which is the new valuation line we suggest.

Source: Datastream, Wind, Gao Hua Securities Research.

Source: Datastream, Reuters, Gao Hua Securities Research.

y = 4.5237x + 0.6408R² = 0.5456

-

1.0

2.0

3.0

0% 5% 10% 15% 20% 25% 30%

SAIC

Changan(A)

Weichai (A)

JAC

Huayu

Great Wall (A)

Average ROE (2016-18E)

P/B (2016E)

Faw Car

y = 4.5732x + 0.3313R² = 0.8165

-

1.0

2.0

3.0

0% 5% 10% 15% 20% 25% 30% 35% 40%

Dongfeng

GACGeely

Sinotruk

Great Wall (H)

Weichai (H)

BrillianceMinth

Changan (B)

2016 年 2 月 23 日中国：汽车


Relatively attractive risk-reward, with sector trading at historical lows on P/B We expect the recent stimulus policy move to be positive for auto sector valuations – as in 2009. In the 4Q2015, the China passenger car market grew by 16.5% yoy and we forecast 15% volume growth in China car market in 2016E. Nevertheless, along with the market correction, auto stocks have de-rated and H-share autos are now close to historical lows (since 2011), in our view offering a relatively attractive risk-reward profile.

Exhibit 32: H share val. Ratio is now trading close to historical lows (since 11)H share val. ratio (ie, line of best PB-ROE fit) since Jan2011

Exhibit 33: Current mark-to-market line is close to its historical low 12MF P/B vs. 12MF ROE historical regression range, since Jan 2011 to date

Source: Plottool, Gao Hua Securities Research.

Source: Bloomberg, Company data, Gao Hua Securities Research.

Note: The PB/ROE best fit lines in the exhibits above have two variables: slope and intercept (jointly deciding the sector valuation), which is hard to portray in a time-series chart showing the sector valuation evolution over the time. Here we introduce P/B-ROE ValRatio, i.e., the slope of PB/ROE best fit line which goes through the zero point (hence we eliminate the intercept). Via the time-series chart of sector ValRatio, we see the historical range of sector valuation in a simple portrayal.

5

6

7

8

9

10

11

12

13

14

Jan‐11

Apr‐11

Jul‐1

1

Oct‐11

Jan‐12

Apr‐12

Jul‐1

2

Oct‐12

Jan‐13

Apr‐13

Jul‐1

3

Oct‐13

Jan‐14

Apr‐14

Jul‐1

4

Oct‐14

Jan‐15

Apr‐15

Jul‐1

5

Oct‐15

Jan‐16

Since Jan2011 historical val. ratio (H share)

Val. Ratio (12MF PB‐ROE) Since Jan11 median

Historical low: Aug 26, 2015Val. bottom at 5.69

Current Val. at 5.93

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

12MF PB

12MF ROE

Since Jan2011 historical regression range (H share)

Historical high: 20‐Apr‐2011intercept= 0.86, slope= 9.18

Historical median: 13‐Mar‐2013intercept= 0.36, slope= 7.84

Last Valuation: 30‐Sep‐2015intercept= 0.65, slope= 3.72

Historical low: 26‐Aug‐2015intercept= 0.74, slope= 2.39

Current market‐to‐market: 17‐Feb‐2016, intercept= 0.61, slope= 3.19

2016 年 2 月 23 日中国：汽车


For our dealer coverage, we still use EV/GCI vs. 2016E-18E average CROCI/WACC For dealers we continue to use 2016E EV/GCI vs. 2016E-18E average CROCI/WACC. Exhibit 35 shows that for H-share dealers the EV/GCI ratio (cash sector multiple) has been on a downward trend since 2011on the back of falling gross profit margins for new cars. We continue to use an EV/GCI sector cash multiple one Standard Deviation below the historical median to account for the tough climate dealers face, even though we see them regaining bargaining power vs. OEMs, and with GPMs for new car sales stabilizing.

We use SOTP to value Harmony given the non-traditional profile of its new independent maintenance store business and its EV business.

Exhibit 34: Zhengtong is under-valued in the dealer space, in our view Dealer coverage DC regression (x)

Exhibit 35: We use a sector cash multiple 1STD below the median to value dealers, given near-trough gross profit margins Sector cash multiple (EV/GCI) of H-share dealer coverage, 2011-now

Note: Dotted line is the medium – 1STD line; solid line is the current mark-to-market line.

Source: Quantum, Gao Hua Securities Research.

Source: DataStream, Gao Hua Securities Research.

Overall, we revise our 12-month target prices by minus 36.1% to plus 11.6% as we factor in the updates in our PB/ROE and EV/GCI vs CROC/WACC sector plots and make some adjustment to company specific discounts/premiums, as set out on the next page.

y = 0.6776x + 0.0576R² = 0.6787

0.00

0.40

0.80

1.20

1.60

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50

2016E EV/GCI

AVG. 2016E-2018E CROCI/WACC

ZhongshengZhengtong

Baoxin

Harmony (4S)

‐

1.00

2.00

3.00

4.00

23‐Feb‐11 23‐Feb‐12 23‐Feb‐13 23‐Feb‐14 23‐Feb‐15

Sector avg. EVGCI Median

Median + STD Median ‐ STD

2016 年 2 月 23 日中国：汽车


We highlight below the valuation premium/discounts applied to our coverage (Exhibit 37):

We maintain 12% discount on SAIC to reflect its fourth quartile growth profile;

We increase Baoxin valuation premium from previous 17% to 34% in light of crystallization of 75% stake acquisition proposal from China Grand (the biggest car dealer in China);

We retain our 34% premium on FAW Car in light of the planned asset injection/FAW Group listing;

We retain our 10% premium for Brilliance as we expect further new product localization e.g., 2 series, X3, and 1 series to continue to fuel its mid-term growth;

We retain our 12% discount (in line with its historical valuation discount since January 2011) on Dongfeng to reflect its low growth profiles over the next three years;

We retain our 10% premium on Changan A given its first quartile ROE/CROCI;

On Huayu, we keep 15% valuation discount on relative lower organic growth of business in 2015E-17E if we strip out the earnings growth contribution from restructuring;

We increase the illiquidity B-A discount on Weifu B from 20% to 40% with the forthcoming HK-SZ connection;

We maintain 15% valuation premium on Minth as among our global coverage, commodity parts makers were trading at an average 15% P/E premium vs OEMs over 2011-2014;

We remove our 10% premium on Great Wall A/H to reflect declining ROE/CROCI over the medium term;

We do not apply any premium/discount for the rest of our coverage.

We adopt different valuation methodologies for the following stocks:

Weichai A/H: We continue to use SOTP due to the public listing of its associate company Kion in June 2013. We increase conglomerate discount from 5% to 12% due to higher portion of valuation contributed by Kion

Dongfeng: We continue to use SOTP to incorporate its c.14% stake in Peugeot from May 22, 2014.

Geely: We retain our SOTP to incorporate its two JVs with Kandi/Xindayang involved in the sale and manufacture of electric vehicles. For its Internal Combustion Car (ICE) car business we still use PB-ROE valuation method, and for the electric vehicle business we use DCF.

Sinotruk: We apply 0.4X PB downside protection multiple for Sinotruk, set at 1 STD discount to the median of current H-share valuation.

Weifu A/B: We change Weifu’s valuation methodology to SOTP from P/B-ROE as we think Weifu-Bosch JVs and Weifu’s own business should be valued separately given their different growth momentum in 2016-18E.

2016 年 2 月 23 日中国：汽车


Exhibit 36: China auto coverage valuation summary

*Conviction list.


Valuation Summary - China Auto Rating 2/18/2016 12-month 12-month TP Chg. Potential TP-Applied PB TP-Applied PETicker Company name Currency Rating (Old) Close TP TP (Old) up/downside 2016E 2016ECar makers (JV)0489.HK Dongfeng HKD Buy* Buy* 9.56 11.89 13.11 -9.3% 24.3% 0.90 5.78 000625.SZ Changan (A) CNY Buy Buy 14.80 18.18 18.36 -1.0% 22.9% 2.13 6.82 600104.SS SAIC CNY Buy Buy 18.75 21.28 19.84 7.3% 13.5% 1.24 6.97 200625.SZ Changan (B) HKD Neutral Buy 14.58 15.44 16.81 -8.1% 5.9% 1.57 5.04 1114.HK Brilliance HKD Neutral Sell 6.82 6.89 7.65 -10.0% 1.0% 1.19 6.98 2238.HK GAC (H) HKD Neutral Buy 7.43 6.64 8.02 -17.2% -10.6% 0.89 7.08 Avg. 1.32 6.45 Car makers (Local)0175.HK Geely HKD Neutral Buy 3.04 3.11 4.51 -31.0% 2.4% 1.11 7.52 2333.HK Great Wall (H) HKD Neutral Neutral 5.76 5.76 7.48 -23.0% 0.0% 1.02 5.66 601633.SS Great Wall (A) CNY Neutral Neutral 8.47 6.71 7.73 -13.2% -20.8% 1.37 7.58 600418.SS JAC CNY Neutral Neutral 10.31 7.78 11.60 -32.9% -24.5% 1.37 8.51 000800.SZ FAW Car CNY Sell Sell 12.76 5.27 8.24 -36.1% -58.7% 0.96 54.45 Avg. 1.17 16.75 CV makers000338.SZ Weichai (A) CNY Neutral Neutral 7.43 7.55 8.36 -9.7% 1.6% 0.87 20.13 3808.HK Sinotruk HKD Neutral Neutral 2.79 2.61 3.20 -18.5% -6.5% 0.32 20.82 2338.HK Weichai (H) HKD Neutral Neutral 7.59 6.17 8.67 -28.8% -18.7% 0.62 14.31 Avg. 0.60 18.42 Parts000581.SZ Weifu (A) CNY Neutral Buy 17.51 18.75 27.19 -31.0% 7.1% 1.43 11.39 600741.SS Huayu CNY Neutral Neutral 13.89 13.96 14.15 -1.4% 0.5% 1.10 7.69 200581.SZ Weifu (B) HKD Neutral Neutral 14.18 12.94 20.18 -35.9% -8.7% 0.86 6.83 600660.SS Fuyao (A) CNY Neutral Neutral 13.95 12.36 12.36 0.0% -11.4% 1.67 9.05 0425.HK Minth HKD Neutral Neutral 14.60 12.36 14.25 -13.2% -15.3% 1.18 7.60 3606.HK Fuyao (H) HKD Neutral Neutral 16.62 13.85 13.85 0.0% -16.7% 1.63 8.82 Avg. 1.31 8.56 Dealers1728.HK Zhengtong HKD Buy Buy 2.98 3.56 4.30 -17.2% 19.5% 0.73 8.31 3836.HK Harmony HKD Buy Buy 4.88 5.49 6.34 -13.4% 12.5% 1.16 10.61 1293.HK Baoxin HKD Neutral Neutral 4.56 3.74 3.35 11.6% -18.0% 1.30 9.31 0881.HK Zhongsheng HKD Sell Sell 3.80 2.51 2.47 1.6% -33.9% 0.38 5.22 Avg. 0.89 8.36

2016 年 2 月 23 日中国：汽车


Exhibit 37: We remove 10% valuation premium on Great Wall A/H; restructuring premium on Baoxin up to 34% from 17%; Weichai conglomerate discount up from 5% to 12% China auto coverage valuation methodology and valuation premium/discount summary

Source: Gao Hua Securities Research.

ROE/CROCI quartiling

Ticker Company New Old Chg New New Applied PB Old New Old

Car makers (JV)0489.HK Dongfeng Buy* Buy* = SOTP SOTP 12% low growth discount on Dongfeng excl. PSA 12% low growth discount on Dongfeng excl. PSA000625.SZ Changan (A) Buy Buy = PB‐ROE 1.76 PB‐ROE 10% 1st quartile ROE premium 10% 1st quartile ROE premium600104.SS SAIC Buy Buy = PB‐ROE 1.11 PB‐ROE 12% low growth discount 12% low growth discount200625.SZ Changan (B) Neutral Buy ↓ PB‐ROE 1.38 PB‐ROE 10% 1st quartile ROE premium 10% 1st quartile ROE premium1114.HK Bril l iance Neutral Sell ↑ PB‐ROE 1.07 PB‐ROE 10% high growth premium 10% high growth premium2238.HK GAC (H) Neutral Buy ↓ PB‐ROE 0.94 PB‐ROE

Car makers (Local)0175.HK Geely Neutral Buy ↓ SOTP SOTP2333.HK Great Wall (H) Neutral Neutral = PB‐ROE 0.97 PB‐ROE 10% 1st quartile ROE premium601633.SS Great Wall (A) Neutral Neutral = PB‐ROE 1.76 PB‐ROE 10% 1st quartile ROE premium600418.SS JAC Neutral Neutral = PB‐ROE 1.84 PB‐ROE000800.SZ FAW Car Sell Sell = PB‐ROE 2.32 PB‐ROE 34% restructuring premium 34% restructuring premium

CV makers000338.SZ Weichai (A) Neutral Neutral = SOTP SOTP 12% conglomerate discount 5% conglomerate discount3808.HK Sinotruk Neutral Neutral = PB‐ROE 0.32 PB‐ROE 0.4X PB (downside protection multiple) 0.4X PB (downside protection multiple)2338.HK Weichai (H) Neutral Neutral = SOTP SOTP 12% conglomerate discount 5% conglomerate discount

Parts000581.SZ Weifu (A) Neutral Buy ↓ SOTP Global PB‐ROE600741.SS Huayu Neutral Neutral = PB‐ROE 1.10 PB‐ROE 15% low growth discount 15% low growth discount200581.SZ Weifu (B) Neutral Neutral = SOTP Global PB‐ROE B‐A discount at 40% ‐ use peers median B‐A discount at 40% ‐ use peers median600660.SS Fuyao (A) Neutral Neutral = PB‐ROE 1.86 PB‐ROE 15% parts premium 15% parts premium0425.HK Minth Neutral Neutral = PB‐ROE 1.32 PB‐ROE 15% parts premium 15% parts premium3606.HK Fuyao (H) Neutral Neutral = PB‐ROE 1.88 PB‐ROE 15% parts premium 15% parts premium

Dealers1728.HK Zhengtong Buy Buy = DC DC3836.HK Harmony Buy Buy = SOTP 0.94 SOTP1293.HK Baoxin Neutral Neutral = DC DC 34% restructuring premium 17% restructuring premium0881.HK Zhongsheng Sell Sell = DC DC

Rating TP methodology Premium/discount

2016 年 2 月 23 日中国：汽车


Exhibit 38: By sub-sector ROE quartile suggests Changan/Brilliance enjoy 1st quartile ROE in their own space By sub-sector ROE quartile, 2012-2018E

Exhibit 39: As they do in CROCI quartiling By sub-sector CROCI quartile, 2012-2018E

Source: Company data, Gao Hua Securities Research.

Source: Company data, Gao Hua Securities Research.

Revising earnings estimates in a wide range With this report, we revise our 2015E-18E EPS estimates in a large range of -85% to +15% for our China auto coverage – mostly based on lower-than expected operating leverage in the passenger car sector (as a result of weak pricing/mix) and lower total market estimates for Heavy Duty Trucks.

ROE quartiling by sub-sectorTicker Company name 2012 2013 2014 2015E 2016E 2017E 2018EOffshore200581.SZ Weifu (B) 13.0% 12.1% 15.0% 13.5% 13.2% 13.0% 13.6%2238.HK GAC 3.8% 8.2% 9.3% 11.1% 13.1% 12.8% 12.6%200625.SZ Changan (B) 9.6% 20.4% 34.0% 33.2% 34.4% 25.8% 23.9%0175.HK Geely 18.2% 18.4% 8.6% 11.8% 15.7% 17.0% 16.1%0489.HK Dongfeng 18.1% 18.0% 18.8% 17.3% 16.7% 13.7% 12.4%2333.HK Great Wall (H) 29.8% 33.2% 26.2% 22.1% 19.3% 14.6% 13.4%1114.HK Brilliance 27.1% 29.3% 36.1% 20.9% 18.7% 16.6% 16.3%3808.HK Sinotruk 0.7% 1.4% 2.1% 1.7% 1.5% 1.5% 1.5%0425.HK Minth 13.1% 13.7% 14.2% 14.9% 16.3% 15.5% 15.8%1958.HK BAIC 26.2% 13.7% 15.8% 12.0% 13.1% 12.1% 12.3%2338.HK Weichai (H) 12.5% 13.6% 16.7% 4.4% 4.4% 4.7% 4.9%

Average 14.4% 15.4% 16.6% 14.8% 15.1% 13.4% 13.0%

Offshore - dealer1293.HK Baoxin 20.8% 23.5% 14.5% 12.5% 14.8% 16.2% 15.5%1728.HK Zhengtong 9.4% 11.8% 10.2% 8.6% 9.1% 9.2% 8.8%0881.HK Zhongsheng 10.3% 12.7% 7.7% 6.4% 7.4% 7.7% 8.3%3836.HK Harmony 48.7% 28.8% 22.0% 12.9% 11.5% 11.8% 12.7%

Average 22.3% 19.2% 13.6% 10.1% 10.7% 11.2% 11.3%

Onshore000581.SZ Weifu (A) 13.0% 12.1% 15.0% 13.5% 13.2% 13.0% 13.6%600104.SS SAIC 18.5% 19.1% 18.9% 17.9% 18.7% 16.1% 15.4%000625.SZ Changan (A) 9.6% 20.4% 34.0% 33.2% 34.4% 25.8% 23.9%600741.SS Huayu 17.3% 18.3% 21.1% 19.0% 17.0% 13.1% 12.5%600418.SS JAC 8.5% 14.3% 7.6% 12.0% 16.9% 15.4% 14.8%601633.SS Great Wall (A) 29.8% 33.2% 26.2% 22.1% 19.3% 14.6% 13.4%000800.SZ FAW Car -9.5% 12.4% 1.9% 0.7% 1.8% 2.1% 3.3%000338.SZ Weichai (A) 12.5% 13.6% 16.7% 4.4% 4.4% 4.7% 4.9%

Average 12.4% 17.9% 17.7% 15.4% 15.7% 13.1% 12.7%

Global tech parts peers000581.SZ Weifu (A) 13.0% 12.1% 15.0% 13.5% 13.2% 13.0% 13.6%BWA BorgWarner 21.8% 18.7% 20.7% 19.1% 19.3% 19.6% 19.3%CONG.DE Continental 23.7% 21.6% 24.1% 22.9% 22.1% 20.7% 19.3%6902.T Denso 4.5% 8.4% 11.5% 10.0% 7.5% 7.5% 7.6%7259.T Aisin Seiki 7.8% 9.8% 9.7% 7.1% 8.0% 8.6% 8.9%6594.T Nidec 11.2% 2.0% 12.1% 12.1% 12.9% 15.6% 16.7%

Average 20.5% 17.8% 21.4% 29.1% 29.4% 20.9% 19.9%

CROCI quartiling by sub-sectorTicker Company name 2012 2013 2014 2015E 2016E 2017E 2018EOffshore200581.SZ Weifu (B) 16.6% 15.6% 17.2% 17.8% 18.7% 18.8% 4.7%2238.HK GAC 9.5% 13.9% 14.3% 18.3% 19.7% 17.7% 16.8%200625.SZ Changan (B) 17.7% 21.9% 25.9% 32.1% 30.3% 25.5% 23.6%0175.HK Geely 23.9% 29.1% 20.3% 14.4% 21.9% 22.4% 20.7%0489.HK Dongfeng 28.6% 6.2% 23.5% 21.0% 20.7% 19.2% 1.7%2333.HK Great Wall (H) 38.7% 39.4% 29.5% 16.3% 21.8% 18.0% 16.3%1114.HK Brilliance 36.3% 30.6% 26.3% 26.2% 22.9% 20.8% 19.8%3808.HK Sinotruk 6.8% 5.8% 4.4% 13.0% 6.6% 6.2% 5.8%0425.HK Minth 20.5% 19.6% 14.5% 11.7% 17.6% 16.1% 16.9%1958.HK BAIC -3.3% -5.5% 6.0% 7.7% 14.6% 15.1% 16.0%2338.HK Weichai (H) 18.8% 17.5% 31.6% 11.8% 10.9% 11.1% 11.2%

Average 19.5% 17.6% 19.4% 17.3% 18.7% 17.4% 13.9%

Offshore - dealer1293.HK Baoxin 79.6% 31.2% 24.9% 14.7% 15.4% 16.2% 14.9%1728.HK Zhengtong 16.9% 24.9% 24.1% 10.7% 12.3% 12.9% 13.3%0881.HK Zhongsheng 26.6% 20.5% 15.9% 8.1% 7.9% 8.1% 8.2%3836.HK Harmony 29.7% 33.9% 46.8% 17.8% 18.6% 17.9% 17.4%

Average 38.2% 27.6% 27.9% 12.8% 13.6% 13.8% 13.5%

Onshore000581.SZ Weifu (A) 16.8% 15.6% 17.2% 17.8% 18.7% 18.8% 4.7%600104.SS SAIC 40.2% 26.8% 31.2% 11.1% 26.6% 23.9% 22.1%000625.SZ Changan (A) 17.7% 21.9% 25.9% 32.1% 30.3% 25.5% 23.6%600741.SS Huayu 31.0% 30.2% 37.5% 21.9% 25.0% 16.3% 14.7%600418.SS JAC 19.7% 28.2% 20.7% 6.0% 27.7% 25.7% 21.1%601633.SS Great Wall (A) 33.2% 33.6% 21.4% 16.6% 22.7% 18.7% 16.9%000800.SZ FAW Car -0.6% 14.0% 7.7% 4.6% 6.1% 5.7% 5.7%000338.SZ Weichai (A) 18.7% 17.9% 19.4% 12.1% 10.4% 10.4% 10.3%

Average 22.1% 23.5% 22.6% 15.3% 20.9% 18.1% 14.9%

Global tech parts peers000581.SZ Weifu (A) 16.8% 15.6% 17.2% 17.8% 18.7% 18.8% 4.7%BWA BorgWarner 15.4% 14.1% 18.3% 14.4% 15.4% 15.8% 15.4%CONG.DE Continental 10.9% 12.5% 12.5% 12.0% 11.9% 11.9% 11.8%6902.T Denso 5.7% 7.8% 9.3% 6.9% 8.4% 8.7% 9.0%7259.T Aisin Seiki 8.8% 9.6% 8.8% 7.9% 8.8% 8.8% 8.8%6594.T Nidec 10.9% 6.4% 12.3% 13.8% 16.0% 20.9% 21.0%

Average 14.1% 13.2% 15.4% 13.8% 14.9% 15.6% 13.4%

2016 年 2 月 23 日中国：汽车


For those with substantial earnings estimate revisions of more than 5%, we discuss in detail below the table.

Exhibit 40: Summary of revisions to earnings estimates

Source: Gao Hua Securities Research.

EPS change summary (Rmb)New Old Diff. New Old Diff. New Old Diff. New Old Diff.

Car makers (JV)0489.HK Dongfeng 1.60 1.60 0% 1.79 1.85 ‐3% 1.68 1.65 1% 1.69 1.69 0%000625.SZ Changan (A) 2.06 2.07 0% 2.66 2.91 ‐8% 2.37 2.97 ‐20% 2.52 3.13 ‐19%600104.SS SAIC 2.68 2.68 0% 3.05 3.11 ‐2% 2.86 2.88 ‐1% 2.96 2.96 0%200625.SZ Changan (B) 2.06 2.07 0% 2.66 2.91 ‐8% 2.37 2.97 ‐20% 2.52 3.13 ‐19%1114.HK Brilliance 0.78 0.77 2% 0.86 0.89 ‐3% 0.90 0.97 ‐7% 1.05 1.14 ‐8%2238.HK GAC (H) 0.64 0.64 ‐1% 0.81 0.91 ‐11% 0.87 1.06 ‐18% 0.93 1.14 ‐18%

Avg. 0% -6% -11% -11%Car makers (Local)0175.HK Geely 0.24 0.33 ‐27% 0.36 0.55 ‐34% 0.44 0.57 ‐23% 0.48 0.68 ‐30%2333.HK Great Wall (H) 0.88 0.88 0% 0.88 1.04 ‐15% 0.75 1.04 ‐28% 0.76 1.06 ‐28%601633.SS Great Wall (A) 0.88 0.88 0% 0.88 1.04 ‐15% 0.75 1.04 ‐28% 0.76 1.06 ‐28%600418.SS JAC 0.60 0.97 ‐38% 0.91 2.13 ‐57% 0.92 1.75 ‐48% 0.97 1.92 ‐50%000800.SZ FAW Car 0.04 0.24 ‐85% 0.10 0.65 ‐85% 0.11 0.61 ‐81% 0.19 0.73 ‐74%

Avg. -30% -41% -41% -42%CV makers000338.SZ Weichai (A) 0.37 0.46 ‐21% 0.38 0.57 ‐35% 0.41 0.63 ‐35% 0.45 0.69 ‐34%3808.HK Sinotruk 0.12 0.15 ‐22% 0.11 0.21 ‐49% 0.11 0.28 ‐61% 0.11 0.34 ‐69%2338.HK Weichai (H) 0.37 0.46 ‐21% 0.38 0.57 ‐35% 0.41 0.63 ‐35% 0.45 0.69 ‐34%

Avg. -21% -39% -43% -46%Parts000581.SZ Weifu (A) 1.53 1.60 ‐4% 1.65 2.21 ‐25% 1.78 2.79 ‐36% 2.04 3.42 ‐40%600741.SS Huayu 1.86 1.88 ‐1% 1.82 2.36 ‐23% 1.74 2.35 ‐26% 1.82 2.57 ‐29%200581.SZ Weifu (B) 1.53 1.60 ‐4% 1.65 2.21 ‐25% 1.78 2.79 ‐36% 2.04 3.42 ‐40%600660.SS Fuyao (A) 1.13 1.13 0% 1.37 1.37 0% 1.54 1.54 0% 1.88 1.88 0%0425.HK Minth 1.18 1.18 0% 1.41 1.55 ‐9% 1.48 1.57 ‐6% 1.66 1.93 ‐14%3606.HK Fuyao (H) 1.13 1.13 0% 1.37 1.37 0% 1.54 1.54 0% 1.88 1.88 0%

Avg. -2% -14% -17% -21%Dealers1728.HK Zhengtong 0.33 0.33 0% 0.37 0.42 ‐10% 0.41 0.45 ‐9% 0.42 0.45 ‐7%3836.HK Harmony 0.39 0.39 ‐1% 0.45 0.48 ‐6% 0.51 0.55 ‐8% 0.60 0.66 ‐8%1293.HK Baoxin 0.26 0.31 ‐17% 0.35 0.39 ‐10% 0.43 0.46 ‐6% 0.46 0.50 ‐8%0881.HK Zhongsheng 0.34 0.32 8% 0.42 0.38 10% 0.46 0.42 12% 0.53 0.46 15%

Avg. -2% -4% -3% -2%Avg. -11% -21% -23% -24%

2015E 2016E 2017E 2018E

2016 年 2 月 23 日中国：汽车


Great Wall: We revise our 2016E-18E EPS by -15%/-28%/-28%

Reflecting: 1) weaker new product volume ramp-up and higher SUV price erosion due to tougher competition as all competitors are launching SUV models extensively in coming years; 2) lower capacity utilization rate after addition of Xushui plant 2 and 3 in the coming three years; 3) lower GPM as a result of above-mentioned points; 4) higher expenses on new energy vehicle R&D.

Geely: We revise our 2015E-18E EPS by -27/-34%/-23%/-30%

Factoring in: 1) Weaker 2015 profit pre-announcement. On Jan 6, the company announced a profit alert with 2015E net profit +50%-60% yoy — i.e., 2H15 net profit to decline by 37%-47% hoh (ie, 41%-51% below GHe in 2H15, mainly due to the unrealized foreign exchange loss arising from Russia operation and the unrealized currency translation loss on USD-denominated Senior Notes (US$300mn); 2) Quicker than expected volume shrinkage of old models as well as lower exports; 3) Continuing forex loss in 2016E given weak Ruble and Rmb vs USD; 4) Higher SG&A exp. to reflect extra marketing and R&D expenses needed for new products.

JAC: We revise our 2015E-18E EPS by -38%/-57%/-48%/-50%

Reflecting: 1) Weaker 2015 profit pre-announcement. On Jan 29, the company announced a profit alert with 2015E net profit up by +65% yoy, i.e., 4Q15 net profit to be c.70% below GHe; 2) Quicker volume shrinkage of old models and higher SUV price erosion due to tougher competition as all competitors are launching SUV models extensively in coming years; 2) lower GPM as a result of revised volume and pricing; 4) higher expenses on marketing and R&D activities.

FAW Car: We revise our 2015E-18E EPS by -85%/-85%/-81%/-74%

Reflecting: 1) Weaker 2015 profit pre-announcement. On Jan 30, the company announced a profit alert with 2015E net profit down 44%-88% yoy, i.e., 4Q15 net profit to be c.91% below GHe; 2) Slower-than-expected volume of bigger cars and higher price erosion due to tougher competition; 2) lower GPM as a result of revised volume and pricing; 3) higher expenses on marketing and R&D activities.

Changan: We revise our 2016E-18E EPS by -8%/-20%/-19%,

Reflecting: 1) Slower than expected volume ramp-up of the new products and higher price erosion due to tougher competition in the next three years; 2) lower GPM as well as NPM from joint ventures with Ford and Mazda as a result of revised volume and pricing.

GAC: We revise our 2015E-18E EPS by -1%/-11%/-18%/-18%

Reflecting: 1) Slower than expected volume ramp-up of the new products and higher price erosion due to tougher competition in the next three years, even in the SUV space where GAC will launched three new models in its JV with Fiat/Chrysler; 2) weaker product mix as main growth might coming from cheaper/smaller models in the future; 3) lower GPM as well as NPM from joint ventures as a result of revised volume and pricing.

Brilliance: We revise our 2015E-18E EPS by +2%/-3%/-7%/-8%

Reflecting: 1) weaker than expected total luxury market; 2) weaker BMW vol./pricing on back of intensified competition and weak BMW product cycle; 3) potential high dealer rebate needed as a response to tough competition.

2016 年 2 月 23 日中国：汽车


Sinotruk: We revise our 2015E-18E EPS by -22%/-49%/-61%/-69%

Reflecting: 1) weaker than expected Heavy Duty Truck (HDT) recovery given overall economic slowdown; 2) slower than expected ASP increase on weak enforcement of emission standard upgrade.

Weichai: We revise our 2015E-18E EPS by -21%/-35%/-35%/-34%

Reflecting 1) Weaker 2015 profit pre-announcement. On Jan 27, the company announced a profit alert with 2015E net profit down by c.67%-78% yoy, i.e., 4Q15 net profit to be c.59% below GHe; 2) weaker than expected HDT recovery given overall economy slow down; 3) slower than expected ASP increase on weak enforcement of emission standard upgrade; 4) structural market share loss to competitors who are launching better quality engines for HDT.

Weifu: We revise our 2015E-18E EPS by -4%/-25%/-36%/-40%

Reflecting: 1) weaker than expected HDT recovery; 2) slower than expected penetration of Euro IV compliance products in the market upon weak enforcement of emission standard upgrade; 3) slower market share ramp-up on competition from other low cost solutions.

Huayu: We revise our 2015E-18E EPS by -1%/-23%/-26%/-29%

Mainly reflecting dilution impact of recent share placement.

Minth: We revise our 2016E-18E EPS by -9%/-6%/-14%

Reflecting higher pricing pressure passed on from OEMs in coming years when pricing competition becomes tougher.

Harmony: We revise our 2015E-18E EPS by -1%/-6%/-8%/-9%

Reflecting: 1) weaker luxury volume/pricing/new car sales GPM outlook; 2) intensified competition in the aftermarket.

Zhengtong: We revise our 2016E-18E EPS by -10%/-9%/-7%

Reflecting: 1) weaker luxury volume/pricing/new car sales GPM outlook; 2) intensified competition in the aftermarket; 3) slower revenue ramp-up of auto finance business.

Baoxin: We revise our 2015E-18E EPS by -17%/-10%/-6%/-8%

Reflecting: 1) Weaker 3Q15 profit: On Dec 11, Baoxin announced the acquisition proposal from China Grand (600297.SS, Not Covered by GS) and 3Q results — with revenue amounting to Rmb2.56bn, -56% yoy and only 22% of 2H15E; 3Q15 net profit of Rmb-248mn, vs. 3Q14’s Rmb2mn and our 2H15E estimate of Rmb271mn; 2) weaker luxury volume/pricing/new car sales GPM outlook; 3) intensified competition in the aftermarket.

Zhongsheng: We revise our 2015E-18E EPS by +8%/+10%/+12/+15%

Reflecting stronger volume and new cars sales GPM contributed by its major brands: Mercedes Benz and Japanese brands who are gaining MS in China due to strong product cycle.

2016 年 2 月 23 日中国：汽车


Dongfeng: Reiterate CL-Buy on stable volume growth and attractive valuation

Source of opportunity 1) We expect Dongfeng to sustain stable volume growth in 2016E (4Q15 passenger car retail volume +22% yoy

vs industry +16%; Jan 2016 retail volume +18% vs industry +15%), mainly due to strict cost control and pricing

competitiveness and a strong product pipeline especially in SUVs (Dongfeng SUV volume mix reached 35.9% in

2015, vs 30% industry average). We expect SUV models to contribute a greater proportion of volume in 2016E —

including Nissan Qashqai, Murano, Infiniti QX50L, Venucia T70, Dongfeng AX3, MX3/6, SX6/7, Renault

Kadjar/Koleos);

2) Attractive valuation: 2016E P/E and P/B is at 4.5X/0.7X (1STD below its historical median). Our new 12m TP of

HK$11.89 implies 24% upside.

Catalyst:

1) Strong monthly volume yoy growth especially in 1H16 off a low base (compared to 4Q15’s 899k units, 1Q15

and 2Q15 wholesale volumes were lower at 636k/684k units due to channel destocking in 1H15) and a strong

product cycle, and 2) strong 4Q15E earnings (FY15 results are due March 25);

Valuation:

We adjust our 2016E-17E EPS estimates slightly by -3%/+1% as we forecast a minor product mix change in

respond to the stimulus policy. We revise our SOTP-based 12-month target price (that includes the value of

Peugeot at our European team’s target price) to HK$11.89 from HK$13.11, with a cut in Dongfeng China business

valuation as a result of our updated sector PB-ROE valuation line. Dongfeng is currently trading at an attractive

2016E P/E of 4.5X and P/B of 0.7X vs. our H-share OEM coverage at 9.4X and 0.9X respectively.

Key risks:

Slower car market growth; lower volume/price/OPM of JVs with Nissan/Honda/PSA and local brands; higher

forex loss from PSA.

Growth

Returns *

Multiple

Volatility Volatility

Multiple

Returns *

Growth

Investment Profile

Low High

Percentile 20th 40th 60th 80th 100th

* Returns = Return on Capital For a complete description of the investment

profile measures please refer to the

disclosure section of this document.

Dongfeng Motor (0489.HK)

Asia Pacific Autos & Autoparts Peer Group Average

Key data Current

Price (HK$) 9.56

12 month price target (HK$) 11.89

Market cap (HK$ mn / US$ mn) 82,370.1 / 10,587.6

Foreign ownership (%) --

12/14 12/15E 12/16E 12/17E

EPS (Rmb) 1.49 1.60 1.79 1.68

EPS growth (%) 22.0 7.5 11.5 (6.3)

EPS (diluted) (Rmb) 1.49 1.60 1.79 1.68

EPS (basic pre-ex) (Rmb) 1.49 1.60 1.79 1.68

P/E (X) 6.4 5.0 4.5 4.8

P/B (X) 1.1 0.8 0.7 0.6

EV/EBITDA (X) 52.6 14.3 12.1 13.5

Dividend yield (%) 2.1 2.7 3.0 2.8

ROE (%) 18.8 17.3 16.7 13.7

CROCI (%) 23.5 21.0 20.7 19.2

45

55

65

75

85

95

105

115

7

8

9

10

11

12

13

14

Feb-15 May-15 Aug-15 Dec-15

Price performance chart

Dongfeng Motor (L) MSCI China (R)

Share price performance (%) 3 month 6 month 12 month

Absolute (13.9) 10.0 (20.6)

Rel. to MSCI China 2.2 36.6 6.3

Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 2/18/2016 close.

2016 年 2 月 23 日中国：汽车


Dongfeng (0489.HK): Summary financials

Profit model (Rmb mn) 12/14 12/15E 12/16E 12/17E Balance sheet (Rmb mn) 12/14 12/15E 12/16E 12/17E

Total revenue 80,954.0 140,695.7 156,939.4 160,315.1 Cash & equivalents 25,212.0 30,844.7 29,572.6 27,874.2

Cost of goods sold (68,788.0) (120,909.8) (134,476.8) (137,770.1) Accounts receivable 18,327.0 32,764.8 36,547.5 37,333.7

SG&A (10,823.0) (16,300.8) (17,790.4) (18,173.1) Inventory 9,735.0 13,250.4 14,737.2 15,098.1

R&D -- -- -- -- Other current assets 15,883.0 16,816.0 17,656.8 18,539.6

Other operating profit/(expense) 107.0 762.7 693.9 869.1 Total current assets 69,157.0 93,675.9 98,514.1 98,845.6

EBITDA 1,450.0 4,247.9 5,366.0 5,241.0 Net PP&E 11,285.0 15,689.0 20,301.4 24,599.4

Depreciation & amortization (1,456.0) (1,913.0) (2,407.1) (2,867.5) Net intangibles 4,411.0 4,178.6 3,946.2 3,713.7

EBIT (6.0) 2,334.8 2,958.9 2,373.4 Total investments 49,605.0 59,582.2 71,084.1 81,926.0

Interest income 685.0 880.4 1,077.1 1,032.7 Other long-term assets 11,015.0 11,015.0 11,565.8 12,144.0

Interest expense (356.0) (567.4) (549.9) (637.4) Total assets 145,473.0 184,140.6 205,411.5 221,228.7

Income/(loss) from uncons. subs. 2,089.0 1,632.9 1,703.8 1,906.7

Others 12,271.0 11,563.3 12,798.1 12,135.1 Accounts payable 34,387.0 58,786.3 63,540.4 63,209.3

Pretax profits 14,683.0 15,844.1 17,988.1 16,810.6 Short-term debt 17,360.0 14,360.0 16,360.0 19,360.0

Income tax (1,365.0) (1,267.5) (1,618.9) (1,597.0) Other current liabilities 14,936.0 15,065.2 15,278.1 15,148.9

Minorities (473.0) (768.8) (974.3) (781.5) Total current liabilities 66,683.0 88,211.5 95,178.5 97,718.2

Long-term debt 350.0 350.0 350.0 350.0

Net income pre-preferred dividends 12,845.0 13,807.7 15,394.8 14,432.1 Other long-term liabilities 2,988.0 1,893.0 1,893.0 1,893.0

Preferred dividends 0.0 0.0 0.0 0.0 Total long-term liabilities 3,338.0 2,243.0 2,243.0 2,243.0

Net income (pre-exceptionals) 12,845.0 13,807.7 15,394.8 14,432.1 Total liabilities 70,021.0 90,454.5 97,421.5 99,961.2

Post-tax exceptionals 0.0 0.0 0.0 0.0

Net income 12,845.0 13,807.7 15,394.8 14,432.1 Preferred shares 0.0 0.0 0.0 0.0

Total common equity 73,829.0 85,784.4 99,113.9 111,609.9

EPS (basic, pre-except) (Rmb) 1.49 1.60 1.79 1.68 Minority interest 1,623.0 7,901.8 8,876.2 9,657.7

EPS (basic, post-except) (Rmb) 1.49 1.60 1.79 1.68

EPS (diluted, post-except) (Rmb) 1.49 1.60 1.79 1.68 Total liabilities & equity 145,473.0 184,140.6 205,411.5 221,228.7

DPS (Rmb) 0.20 0.21 0.24 0.22

Dividend payout ratio (%) 13.4 13.4 13.4 13.4 BVPS (Rmb) 8.57 9.96 11.50 12.95

Free cash flow yield (%) (5.4) 2.4 (5.7) (7.2)

Growth & margins (%) 12/14 12/15E 12/16E 12/17E Ratios 12/14 12/15E 12/16E 12/17E

Sales growth 117.3 73.8 11.5 2.2 CROCI (%) 23.5 21.0 20.7 19.2

EBITDA growth 253.8 193.0 26.3 (2.3) ROE (%) 18.8 17.3 16.7 13.7

EBIT growth 99.6 NM 26.7 (19.8) ROA (%) 9.8 8.4 7.9 6.8

Net income growth 22.0 7.5 11.5 (6.3) ROACE (%) 22.4 19.6 18.4 14.3

EPS growth 22.0 7.5 11.5 (6.3) Inventory days 37.1 34.7 38.0 39.5

Gross margin 15.0 14.1 14.3 14.1 Receivables days 82.9 66.3 80.6 84.1

EBITDA margin 1.8 3.0 3.4 3.3 Payable days 174.5 140.6 166.0 167.9

EBIT margin 0.0 1.7 1.9 1.5 Net debt/equity (%) (9.9) (17.2) (11.9) (6.7)

Interest cover - EBIT (X) 0.0 NM NM NM

Cash flow statement (Rmb mn) 12/14 12/15E 12/16E 12/17E Valuation 12/14 12/15E 12/16E 12/17E

Net income pre-preferred dividends 12,845.0 13,807.7 15,394.8 14,432.1

D&A add-back 1,456.0 1,913.0 2,407.1 2,867.5 P/E (analyst) (X) 6.4 5.0 4.5 4.8

Minorities interests add-back 473.0 768.8 974.3 781.5 P/B (X) 1.1 0.8 0.7 0.6

Net (inc)/dec working capital (1,001.0) 6,446.2 (515.5) (1,478.2) EV/EBITDA (X) 52.6 14.3 12.1 13.5

Other operating cash flow (14,758.0) (15,005.2) (15,893.5) (15,303.0) EV/GCI (X) 0.5 0.3 0.3 0.3

Cash flow from operations (985.0) 7,930.5 2,367.4 1,300.0 Dividend yield (%) 2.1 2.7 3.0 2.8

Capital expenditures (3,501.0) (6,084.6) (6,787.1) (6,933.1)

Acquisitions 0.0 0.0 0.0 0.0

Divestitures 53.0 0.0 0.0 0.0

Others 2,752.0 3,000.0 3,000.0 3,000.0

Cash flow from investments (696.0) (3,084.6) (3,787.1) (3,933.1)

Dividends paid (common & pref) (1,550.9) (1,723.2) (1,852.4) (2,065.3)

Inc/(dec) in debt 9,704.0 (3,000.0) 2,000.0 3,000.0

Common stock issuance (repurchase) 0.0 0.0 0.0 0.0

Other financing cash flows (2,999.1) 5,510.0 0.0 0.0

Cash flow from financing 5,154.0 786.8 147.6 934.7

Total cash flow 3,473.0 5,632.7 (1,272.1) (1,698.4) Note: Last actual year may include reported and estimated data.

Source: Company data, Goldman Sachs Research estimates.

2016 年 2 月 23 日中国：汽车


GAC (2238.HK): Down to Neutral after recent outperformance; valuation fair What happened

We downgrade GAC H to Neutral from Buy post recent outperformance. Since we added it to the Buy list on Oct 12, 2015, GAC H is up by 9% vs. MSCI-China down 18% and our H-share coverage down 11%.

Current view

Although we think valuation is now fair, we are still positive on the fundamental of the company regarding:

Strong market share growth and product cycle, esp. in SUV space Mainly thanks to Japanese brands’ market share recovery, Jeep new SUV products localization and strong new product cycle of GAC local brands;

Improving net profit margin of GAC-Honda on greater scale.

Potential expansion in luxury space (Acura/Lexus localization).

Nevertheless, we cut our 2015E-18E EPS by -1%/-11%/-18%/-18%, respectively, factoring in:

Slower than expected volume ramp-up of the new products and greater price erosion due to tougher competition in the next three years — even in the SUV space where GAC will launched 3 new models in its JV with Fiat/Chrysler — given the strong new SUV launches from competitors in the next three years;

Weaker product mix as most growth is coming from cheaper/smaller models in future;

Lower GPM and NPM from joint ventures as a result of revised volume/pricing/mix.

Valuation

On the back of our EPS estimate changes and our updated sector valuation regression line, we adjust our 12m target price (based on 2016E P/B vs. average 2016-18E ROE) to HK$6.64 from HK$8.02. GAC is currently trading at 7.6X/1.0X 2016E PE/PB.

Key risks (1) High/lower car market in China; (2) Higher/lower volume/price/GPM of Toyota/Honda/local brands; (3) Quicker/slower localization/volume ramp-up of Jeep SUV; (4) Quicker/slower localization/volume ramp-up of luxury brands (Acura/Lexus).

Growth

Returns *

Multiple


Multiple

Returns *

Growth

Investment Profile

Low High





Guangzhou Automobile Group (2238.HK)


Key data Current

Price (HK$) 7.43




12/14 12/15E 12/16E 12/17E

EPS (Rmb) 0.49 0.64 0.81 0.87

EPS growth (%) 20.1 28.4 28.2 6.4

EPS (diluted) (Rmb) 0.49 0.64 0.81 0.87


P/E (X) 12.8 9.8 7.6 7.2

P/B (X) 1.2 1.1 1.0 0.9

EV/EBITDA (X) NM 37.3 27.9 26.2

Dividend yield (%) 2.5 3.3 4.2 4.5

ROE (%) 9.3 11.1 13.1 12.8

CROCI (%) 14.3 18.3 19.7 17.7

7,000

9,000

11,000

13,000

15,000

17,000

19,000

4

5

6

7

8

9

10



Guangzhou Automobile Group (L) Hang Seng China Ent. Index (R)


Absolute (0.9) 21.2 0.0

Rel. to Hang Seng China Ent. Index 22.0 59.8 47.8


2016 年 2 月 23 日中国：汽车


GAC (2238.HK): Summary financials




SG&A (3,714.6) (3,570.0) (4,180.4) (4,071.3) Inventory 2,660.6 3,064.8 3,658.5 3,613.0



EBITDA 48.3 1,237.9 1,655.1 1,729.7 Net PP&E 8,535.9 10,767.7 12,634.2 13,966.1


EBIT (1,167.3) (920.3) (650.3) (754.1) Total investments 19,934.7 22,816.7 25,965.1 28,245.9

Interest income 438.6 215.9 202.4 171.3 Other long-term assets 2,929.7 2,929.7 2,929.7 2,929.7


Income/(loss) from uncons. subs. 4,181.2 4,882.0 6,148.4 6,780.8

Others 345.4 553.5 303.5 253.5 Accounts payable 10,644.5 11,748.5 14,024.2 13,849.8


Income tax (126.1) (163.0) (290.6) (399.5) Other current liabilities 36.6 329.2 702.2 810.1

Minorities 258.8 307.9 373.7 375.5 Total current liabilities 20,221.7 21,618.2 24,266.9 24,200.3

Long-term debt 4,769.4 6,769.4 6,769.4 6,769.4







EPS (basic, pre-except) (Rmb) 0.49 0.64 0.81 0.87 Minority interest 796.0 (527.6) (2,018.5) (3,622.9)



DPS (Rmb) 0.16 0.21 0.26 0.28


Free cash flow yield (%) (7.6) (6.4) (5.1) (6.2)


Sales growth 18.9 17.3 19.7 (1.1) CROCI (%) 14.3 18.3 19.7 17.7

EBITDA growth (70.1) 2,461.6 33.7 4.5 ROE (%) 9.3 11.1 13.1 12.8

EBIT growth (47.9) 21.2 29.3 (16.0) ROA (%) 5.3 6.3 7.5 7.6

Net income growth 20.1 28.4 28.2 6.4 ROACE (%) 8.7 10.2 11.9 11.8

EPS growth 20.1 28.4 28.2 6.4 Inventory days 46.1 48.7 47.9 52.5



EBIT margin (5.2) (3.5) (2.1) (2.4) Net debt/equity (%) 11.2 17.8 20.6 21.3

Interest cover - EBIT (X) NM NM NM NM




Minorities interests add-back (258.8) (307.9) (373.7) (375.5) P/B (X) 1.2 1.1 1.0 0.9

Net (inc)/dec working capital 934.8 101.8 475.6 (46.8) EV/EBITDA (X) NM 37.3 27.9 26.2


Cash flow from operations 347.6 1,160.6 1,503.0 858.8 Dividend yield (%) 2.5 3.3 4.2 4.5




Others 170.9 1,916.6 2,917.3 4,423.8

Cash flow from investments (3,251.9) (1,758.2) (540.0) 1,316.2

Dividends paid (common & pref) (643.5) (1,029.6) (1,322.2) (1,695.1)

Inc/(dec) in debt 28.2 2,000.0 0.0 0.0


Other financing cash flows (295.3) (1,015.6) (1,117.2) (1,228.9)

Cash flow from financing (910.7) (45.3) (2,439.4) (2,924.1)

Total cash flow (3,815.0) (642.9) (1,476.4) (749.1) Note: Last actual year may include reported and estimated data.


2016 年 2 月 23 日中国：汽车


Changan B (200625.SZ): Down to Neutral on EPS revision & upcoming HK-SZ connection

What happened We downgrade Changan B to Neutral from Buy on EPS revision and the upcoming HK-SZ connection. We see the potential SZ-HK connection might channel some overseas investor towards Changan A rather than Changan B due to A shares’ better liquidity. Since we added the stock to the Buy List on June 24, 2015, Changan B is down 28% vs Shenzhen B Index down 25% and our H-share coverage down 31%. In our view Changan B did not perform as we had expected vs the B-share index, due to its slower than expected earnings growth and the upcoming HK-Shenzhen connection.

Current view Although we think valuation is now fair, we are still positive on the fundamental of the company regarding:

Strong product cycle of both Ford JV and local brands; strong earnings growth (29% in 2016E);

Potential increase in the dividend payout to c.30%, as targeted by management, and high single-digit dividend yield in the coming 2-3 years.

Nevertheless, we cut our 2016E-18E EPS by -8%/-20%/-19% respectively, factoring in:

Slower than expected volume ramp-up of the new products and higher price erosion due to tougher competitionin the next three years;

Lower GPM and NPM from joint ventures with Ford and Mazda as a result of revised volume and pricing.

Valuation On the back of our EPS estimate changes and our updated sector valuation regression line, we adjust our 12m target price (based on 2016E P/B vs. average 2016-18E ROE) to HK$15.44 from HK$16.81 (with an unchanged valuation premium of 10% to factor in sustainable 1st quartile ROE). Changan B is currently trading at 4.6X/1.4X 2016E PE/PB.

Key risks 1) High/lower car market in China; 2) Higher/lower volume/price/GPM of Ford/local brands; 3) High/lower dividend payout ratio.

Growth

Returns *

Multiple


Multiple

Returns *

Growth

Investment Profile

Low High





Chongqing Changan Auto (B) (200625.SZ)


Key data Current

Price (HK$) 14.58




12/14 12/15E 12/16E 12/17E

EPS (Rmb) 1.62 2.06 2.66 2.37

EPS growth (%) 115.7 27.2 29.2 (11.1)

EPS (diluted) (Rmb) 1.62 2.06 2.66 2.37


P/E (X) 7.6 5.9 4.6 5.2

P/B (X) 2.2 1.8 1.4 1.2

EV/EBITDA (X) 34.5 20.8 14.0 15.9

Dividend yield (%) 2.0 5.1 8.7 8.7

ROE (%) 34.0 33.2 34.4 25.8

CROCI (%) 25.9 32.1 30.3 25.5

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

1,800

1,900

10

12

14

16

18

20

22

24

26

28



Chongqing Changan Auto (B) (L) Shenzhen B Index (R)


Absolute (5.3) 12.5 (28.8)

Rel. to Shenzhen B Index (2.3) 14.7 (32.3)


2016 年 2 月 23 日中国：汽车


Changan B (200625.SZ): Summary financials




SG&A (8,099.1) (8,750.3) (10,006.3) (8,863.9) Inventory 6,572.2 7,163.5 9,110.3 5,642.9

R&D -- -- -- -- Other current assets 865.2 865.2 865.2 865.2


EBITDA 1,468.3 2,563.5 3,685.7 3,331.2 Net PP&E 15,839.6 17,275.2 19,643.7 21,765.2


EBIT (515.9) 360.4 1,423.0 1,039.2 Total investments 13,177.9 17,396.6 22,677.4 25,310.1


Interest expense (205.8) (116.4) (56.8) 0.0 Total assets 69,687.2 82,490.9 97,021.6 86,125.3

Income/(loss) from uncons. subs. 110.9 113.7 121.7 129.0


Pretax profits 7,538.8 9,857.4 12,870.1 11,553.4 Short-term debt 90.0 0.0 0.0 0.0

Income tax (20.9) (292.3) (509.9) (571.2) Other current liabilities 7,282.4 9,002.6 11,087.2 11,085.5


Long-term debt 1,971.2 1,971.2 0.0 0.0







EPS (basic, pre-except) (Rmb) 1.62 2.06 2.66 2.37 Minority interest (181.9) (236.7) (302.9) (362.6)



DPS (Rmb) 0.25 0.62 1.07 1.07


Free cash flow yield (%) 2.7 2.8 (1.5) (5.4)


Sales growth 37.5 26.7 18.9 (9.6) CROCI (%) 25.9 32.1 30.3 25.5

EBITDA growth 132.7 74.6 43.8 (9.6) ROE (%) 34.0 33.2 34.4 25.8

EBIT growth 46.9 169.8 294.9 (27.0) ROA (%) 12.3 12.6 13.8 12.1

Net income growth 115.7 27.2 29.2 (11.1) ROACE (%) 41.3 51.1 54.9 37.2

EPS growth 115.7 27.2 29.2 (11.1) Inventory days 47.6 45.0 45.0 45.0



EBIT margin (1.0) 0.5 1.8 1.4 Net debt/equity (%) (30.0) (40.7) (37.3) (29.2)






Net (inc)/dec working capital 2,092.2 745.7 (153.6) (2,712.6) EV/EBITDA (X) 34.5 20.8 14.0 15.9


Cash flow from operations 3,779.9 5,027.9 3,169.2 343.2 Dividend yield (%) 2.0 5.1 8.7 8.7




Others 7,430.5 4,729.6 5,519.1 7,085.7

Cash flow from investments 5,219.6 1,588.2 1,385.3 3,169.4

Dividends paid (common & pref) (466.3) (1,165.7) (2,886.0) (4,970.5)

Inc/(dec) in debt (3,198.0) (90.0) (1,971.2) 0.0


Other financing cash flows 86.3 0.0 0.0 0.0

Cash flow from financing (3,578.0) (1,255.7) (4,857.2) (4,970.5)

Total cash flow 5,421.5 5,360.4 (302.7) (1,457.9) Note: Last actual year may include reported and estimated data.


2016 年 2 月 23 日中国：汽车


Weifu A (000581.SZ): Down to Neutral on weak regulation, trucking stuck in low gear

What happened Weifu’s outlook has dimmed recently amid sluggish truck sales growth, tighter emissions standards and slim signs of a recovery. Previously, we believed Weifu’s vertical integration would help it launch competitively priced products. However, the weak truck cycle has resulted in more lax enforcement of emission regulations, making truck drivers reluctant to pay for additional compliance costs. Weifu’s earnings and future prospects have suffered as a result. In line with this, we cut our 12m TPs for Weifu A/B by 31%/36% to Rmb18.75/HK$12.94 and downgrade Weifu A to Neutral from Buy. Since going to Buy on Oct. 24 ‘14, Weifu A is -35% vs. 24% for Shanghai SE A Share Index.

Current view Given China’s weak macro growth outlook, we now expect the truck cycle to be muted for longer than we previously expected. We cut our 2015-18E earnings estimates by 4.4%/25%/36%/40% for three key reasons:

1. Slower market penetration of Euro IV devices due to weaker-than-expected enforcement of emissions regulations.

2. Lower Weifu market share ramp-up due to its relatively high-quality and high-priced products, making it less competitive in this weak market.

3. Pressure for lower prices due to low-cost competitors and weaker purchasing power caused by the slowing economy; these factors are partly offset by the earlier introduction of compliant products due to earlier adoption of the EU V emission standard to 2017 (vs. our prior expectation of 2018). We also factor in regulation enforcement risk as demand is likely to remain under pressure for longer.

Valuation We change Weifu’s valuation methodology to SOTP from P/B-ROE as we think Weifu-Bosch JVs and Weifu’s own business should be valued separately given their different growth momentum in 2016-18E.

Key risks Stronger/weaker truck/industrial growth; stricter/weaker emission standard regulation enforcement; potential M&A; buybacks.

Growth

Returns *

Multiple


Multiple

Returns *

Growth

Investment Profile

Low High





Weifu High-Technology Group (A) (000581.SZ)


Key data Current

Price (Rmb) 17.51

12 month price target (Rmb) 18.75

Market cap (Rmb mn / US$ mn) 17,860.2 / 2,740.2


12/14 12/15E 12/16E 12/17E

EPS (Rmb) 1.51 1.53 1.65 1.78

EPS growth (%) 38.9 1.4 7.6 8.2

EPS (diluted) (Rmb) 1.51 1.53 1.65 1.78


P/E (X) 17.3 11.4 10.6 9.8

P/B (X) 2.5 1.5 1.3 1.2

EV/EBITDA (X) 25.8 22.5 20.3 17.8

Dividend yield (%) 1.5 2.2 2.6 3.1

ROE (%) 15.0 13.5 13.2 13.0

CROCI (%) 17.2 17.8 18.7 18.8

2,500

3,500

4,500

5,500

6,500

7,500

15

20

25

30

35

40



Weifu High-Technology Group (A) (L) Shanghai SE A Share Index (R)


Absolute (26.9) (35.7) (41.6)

Rel. to Shanghai SE A Share Index (8.8) (15.8) (33.7)


2016 年 2 月 23 日中国：汽车


Weifu A (000581.SZ): Summary financials




SG&A (823.6) (840.9) (897.7) (950.3) Inventory 1,111.7 1,280.2 1,274.5 1,425.4



EBITDA 975.5 693.7 737.8 790.9 Net PP&E 1,827.2 1,891.3 1,918.5 1,954.4

Depreciation & amortization (218.2) (184.6) (187.1) (190.3) Net intangibles 365.6 352.4 339.1 325.8

EBIT 757.2 509.1 550.7 600.6 Total investments 4,180.9 4,667.4 5,141.2 5,588.8

Interest income 52.8 51.8 67.4 82.9 Other long-term assets 512.9 512.9 512.9 512.9


Income/(loss) from uncons. subs. 881.9 1,072.2 1,148.6 1,236.3



Income tax (123.4) (108.7) (118.0) (128.8) Other current liabilities 405.5 383.3 462.6 536.6


Long-term debt 60.0 60.0 60.0 60.0

Net income pre-preferred dividends 1,539.4 1,543.7 1,661.4 1,797.3 Other long-term liabilities 358.7 358.7 358.7 358.7

Preferred dividends 0.0 0.0 0.0 0.0 Total long-term liabilities 418.7 418.7 418.7 418.7





EPS (basic, pre-except) (Rmb) 1.51 1.53 1.65 1.78 Minority interest 404.1 455.8 511.1 570.0



DPS (Rmb) 0.40 0.38 0.46 0.53


Free cash flow yield (%) 0.3 2.7 2.0 3.4


Sales growth 13.7 5.9 6.8 5.9 CROCI (%) 17.2 17.8 18.7 18.8

EBITDA growth 21.0 (28.9) 6.4 7.2 ROE (%) 15.0 13.5 13.2 13.0

EBIT growth 21.8 (32.8) 8.2 9.0 ROA (%) 11.2 10.1 9.9 9.8

Net income growth 38.9 0.3 7.6 8.2 ROACE (%) 18.0 16.3 16.5 17.0

EPS growth 38.9 1.4 7.6 8.2 Inventory days 84.1 84.1 84.1 84.1







D&A add-back 218.2 184.6 187.1 190.3 P/E (analyst) (X) 17.3 11.4 10.6 9.8


Net (inc)/dec working capital 0.6 8.7 (186.1) 17.1 EV/EBITDA (X) 25.8 22.5 20.3 17.8

Other operating cash flow (918.0) (1,072.2) (1,148.6) (1,236.3) EV/GCI (X) 1.5 0.8 0.7 0.6

Cash flow from operations 889.9 716.5 569.1 827.3 Dividend yield (%) 1.5 2.2 2.6 3.1

Capital expenditures (802.5) (235.4) (201.1) (212.9)



Others 4.4 585.7 674.8 788.7

Cash flow from investments (793.5) 350.2 473.7 575.8

Dividends paid (common & pref) (306.1) (408.1) (385.9) (465.2)

Inc/(dec) in debt 15.5 50.0 50.0 50.0



Cash flow from financing (183.9) (358.1) (335.9) (415.2)

Total cash flow (87.5) 708.7 706.9 987.9 Note: Last actual year may include reported and estimated data.


2016 年 2 月 23 日中国：汽车


Geely (0175.HK): Down to Neutral on slower growth guidance despite the strong cycle

What happened On Jan 6th after market close, Geely announced its preliminary FY2015 result:

2015E net profit up 50%-60% yoy, i.e., 2H15 net profit to decline by 37%-47% hoh, i.e., 41%-51% below GHe in 2H15;

Geely attributed the weak 2H15 net profit partly to unrealized foreign exchange loss arising from its Russian operations and the unrealized currency translation loss on USD-denominated Senior Notes (US$300mn);

Geely also announced FY2015 sales volume as well as 2016 volume guidance:

FY2015 volume = 509,863 units, 4.7% below GHe;

FY2016 volume guidance = 600,000 units, 18% below GHe;

Since we added the company to the Buy list on Feb 11, 2015, Geely’s share price has fallen 8% vs. MSCI-China Index down 23% and our H-share coverage down 26%.

Current view We like Geely’s secular upgrade in product quality/technology/ASP. As the company will launch 2 new SUV models (NL-3/NL-4), one cross (EC7 Cross), and 1 new generation of sedan (EC7) in 2016E, we think 2016 volume guidance may be too conservative. Nevertheless we see following headwind vs. our previous estimates:

We cut volume estimates to reflect volume shrinkage of old models as well as lower exports;

Given the weak Ruble and Rmb vs USD, we see forex losses might continue in 2016E;

We add SG&A exp. to reflect more marketing and R&D expenses needed for new product launchings;

We cut our EPS estimates by 27%/34%/23%/30% in 2015E-2018E accordingly.

Valuation We keep SOTP (that includes the value of EV businesses in our DCF valuation) as our valuation methodology. On the back of cuts to our EPS estimates and our updated sector valuation regression line, we adjust our 12m target price to HK$3.11 from HK$4.51.

Key risks Quicker/slower volume ramp-up of new models; higher/lower non-operating income/loss.

Growth

Returns *

Multiple


Multiple

Returns *

Growth

Investment Profile

Low High





Geely Automobile Holdings (0175.HK)


Key data Current

Price (HK$) 3.04




12/14 12/15E 12/16E 12/17E

EPS (Rmb) 0.16 0.24 0.36 0.44

EPS growth (%) (48.8) 49.1 48.5 23.0

EPS (diluted) (Rmb) 0.16 0.24 0.36 0.44


P/E (X) 14.8 10.5 7.1 5.8

P/B (X) 1.2 1.2 1.0 0.9

EV/EBITDA (X) 9.1 6.1 3.9 3.0

Dividend yield (%) 1.5 2.1 3.2 3.9

ROE (%) 8.6 11.8 15.7 17.0

CROCI (%) 20.3 14.4 21.9 22.4

45

55

65

75

85

95

105

2.0

2.5

3.0

3.5

4.0

4.5

5.0



Geely Automobile Holdings (L) MSCI China (R)


Absolute (23.4) (3.8) (9.5)

Rel. to MSCI China (9.2) 19.4 21.2


2016 年 2 月 23 日中国：汽车


Geely (0175.HK): Summary financials




SG&A (3,082.7) (3,144.7) (3,437.8) (3,945.5) Inventory 1,619.5 1,704.5 2,278.7 2,549.7



EBITDA 1,837.7 2,937.5 4,791.5 6,134.4 Net PP&E 5,860.7 7,979.4 10,090.1 12,015.8

Depreciation & amortization (873.5) (1,054.9) (1,222.8) (1,376.0) Net intangibles 4,214.5 3,794.3 3,374.1 2,953.9

EBIT 964.2 1,882.5 3,568.6 4,758.4 Total investments 718.9 1,806.0 1,923.7 2,075.0






Income tax (494.2) (616.2) (1,051.5) (1,290.4) Other current liabilities 6,034.4 7,191.6 7,422.7 7,585.7


Long-term debt 1,820.1 1,820.1 1,820.1 1,820.1










DPS (Rmb) 0.04 0.05 0.08 0.10


Free cash flow yield (%) (1.8) 1.4 (0.1) 4.4


Sales growth (24.3) 33.3 34.0 14.1 CROCI (%) 20.3 14.4 21.9 22.4

EBITDA growth (47.5) 59.8 63.1 28.0 ROE (%) 8.6 11.8 15.7 17.0

EBIT growth (60.2) 95.2 89.6 33.3 ROA (%) 4.0 5.4 7.1 7.8

Net income growth (46.3) 49.1 48.5 23.0 ROACE (%) 12.0 16.1 20.2 21.0

EPS growth (48.8) 49.1 48.5 23.0 Inventory days 36.7 26.3 23.6 25.6




Interest cover - EBIT (X) 40.7 41.8 105.7 140.1



D&A add-back 873.5 1,054.9 1,222.8 1,376.0 P/E (analyst) (X) 14.8 10.5 7.1 5.8


Net (inc)/dec working capital (960.3) 739.2 (1,335.8) (1,341.8) EV/EBITDA (X) 9.1 6.1 3.9 3.0

Other operating cash flow 670.6 (886.9) (190.7) (93.0) EV/GCI (X) 1.1 1.0 0.9 0.7

Cash flow from operations 2,033.0 3,065.6 2,897.4 3,876.6 Dividend yield (%) 1.5 2.1 3.2 3.9




Others 836.7 (1,000.0) 0.0 0.0

Cash flow from investments (1,467.9) (3,753.4) (2,913.4) (2,881.6)


Inc/(dec) in debt 1,540.1 (300.0) (300.0) 0.0


Other financing cash flows (118.4) 1,000.0 0.0 0.0

Cash flow from financing 1,160.4 380.2 (777.0) (708.1)

Total cash flow 1,725.4 (307.7) (793.0) 286.9 Note: Last actual year may include reported and estimated data.


2016 年 2 月 23 日中国：汽车


Brilliance (1114.HK): Up to Neutral; Recent fall prices in near-term volume/rebate risks What happened

We upgrade Brilliance to Neutral from Sell post recent underperformance Since we added it to the Sell list on Oct 12, 2015, Brilliance is down by 38% vs. MSCI-China Index down 18% and our H-share coverage down 11%.

Current view

We see the valuation as now fair and fully reflects the fundamentals of the company regarding:

1. Near-term earnings concerns from:

Muted total luxury market outlook The stimulus package which cuts the purchase tax from 10% to 5% for cars with engines not bigger

than 1.6L will favor luxury sector least. Hence in 4Q15 luxury sector (top 4 brands) only grew by

4.9% vs. the total market’s 16.5%. We see expect luxury growth to underperform the total market

until the end of 2016E, when the stimulus package is due to be withdrawn.

Intensifying competition as major competitors are aggressively localizing their products or

launching new generation of products in China (e.g., Mercedes Benz had launched new C class

normal wheelbase version/GLA/GLC in 2015 and launched new E class in 2016E);

High dealer rebates in order to help dealers maintain relatively healthy new car sales GPM and

shore up their willingness to take more car stock;

2. Mid-term growth outlook upon strong products cycle in 2017/18E

With new generation of 5 series in 2017E and new X3 SUV in 2018E

Valuation

We adjust our 2015E-18E EPS by +2%/-3%/-7%/-8% respectively. On the back of our EPS estimate changes and our updated sector valuation regression line, we adjust our 12m target price (based on 2016E P/B vs. average 2016-18E ROE) to HK$6.89 from HK$7.65. Brilliance is currently trading at 6.7X/1.1X 2016E PE/PB.

Key risks

1) High/lower luxury car market in China; 2) Higher/lower near-term financial impact from

pricing/competition/dealer rebate; 3) Quicker/slower new product launching/volume ramp-up in mid-term.

Growth

Returns *

Multiple


Multiple

Returns *

Growth

Investment Profile

Low High





Brilliance China Automotive (1114.HK)


Key data Current

Price (HK$) 6.82




12/14 12/15E 12/16E 12/17E

EPS (Rmb) 1.08 0.78 0.86 0.90

EPS growth (%) 60.2 (27.1) 9.4 5.4

EPS (diluted) (Rmb) 1.07 0.78 0.86 0.90


P/E (X) 9.5 7.3 6.7 6.3

P/B (X) 3.0 1.4 1.1 1.0

EV/EBITDA (X) NM NM NM NM

Dividend yield (%) 0.0 0.0 0.0 0.0

ROE (%) 36.1 20.9 18.7 16.6

CROCI (%) 26.3 26.2 22.9 20.8

7,000

9,000

11,000

13,000

15,000

17,000

19,000

6

8

10

12

14

16

18



Brilliance China Automotive (L) Hang Seng China Ent. Index (R)


Absolute (33.1) (32.7) (53.5)

Rel. to Hang Seng China Ent. Index (17.7) (11.3) (31.3)


2016 年 2 月 23 日中国：汽车


Brilliance (1114.HK): Summary financials


Total revenue 5,514.8 4,726.8 4,722.6 4,694.5 Cash & equivalents 1,178.6 729.7 3,951.7 5,133.8


SG&A (986.8) (845.8) (845.0) (840.0) Inventory 796.6 522.9 787.7 651.4



EBITDA (180.8) (84.0) (60.3) (60.0) Net PP&E 1,960.2 2,297.7 2,593.8 2,848.7

Depreciation & amortization (139.3) (179.4) (196.9) (211.9) Net intangibles 995.8 951.5 907.2 862.9

EBIT (320.1) (263.5) (257.2) (271.8) Total investments 12,764.1 15,182.7 17,592.0 19,831.8






Income tax (42.9) 0.0 0.0 0.0 Other current liabilities 947.6 947.6 947.6 947.6


Long-term debt 0.0 0.0 0.0 0.0


Preferred dividends 0.0 0.0 0.0 0.0 Total long-term liabilities 119.0 119.5 120.0 120.5





EPS (basic, pre-except) (Rmb) 1.08 0.78 0.86 0.90 Minority interest (977.4) (1,052.7) (1,133.8) (1,218.8)



DPS (Rmb) 0.00 0.00 0.00 0.00


Free cash flow yield (%) 0.1 (8.1) 3.8 (4.6)


Sales growth (9.6) (14.3) (0.1) (0.6) CROCI (%) 26.3 26.2 22.9 20.8

EBITDA growth (110.5) 53.5 28.2 0.6 ROE (%) 36.1 20.9 18.7 16.6

EBIT growth (42.2) 17.7 2.4 (5.7) ROA (%) 25.6 16.4 15.4 13.8

Net income growth 60.2 (27.1) 9.4 5.4 ROACE (%) 37.4 21.5 20.6 19.1

EPS growth 60.2 (27.1) 9.4 5.4 Inventory days 59.4 59.4 59.4 65.6


EBITDA margin (3.3) (1.8) (1.3) (1.3) Payable days 345.4 330.4 330.4 382.8

EBIT margin (5.8) (5.6) (5.4) (5.8) Net debt/equity (%) 1.2 3.2 (10.8) (13.2)

Interest cover - EBIT (X) NM NM NM 6.2





Net (inc)/dec working capital 1,120.5 (1,686.1) 1,648.8 (831.5) EV/EBITDA (X) NM NM NM NM


Cash flow from operations 769.6 (1,759.3) 1,499.5 (844.1) Dividend yield (%) 0.0 0.0 0.0 0.0

Capital expenditures (736.2) (472.7) (448.6) (422.5)



Others 946.0 1,783.1 2,171.1 2,448.7

Cash flow from investments 214.5 1,310.4 1,722.5 2,026.2

Dividends paid (common & pref) 0.0 0.0 0.0 0.0

Inc/(dec) in debt (708.8) 0.0 0.0 0.0



Cash flow from financing (708.8) 0.0 0.0 0.0

Total cash flow 275.3 (448.9) 3,222.0 1,182.2 Note: Last actual year may include reported and estimated data.


2016 年 2 月 23 日中国：汽车


Baoxin (Neutral): We double restructuring premium to 34% on crystallization of acquisition offer On Dec 11, after market close, Baoxin announced the acquisition proposal from China Grand (600297.SS, not covered by GS) with following details: 1) China Grand will take a minimum of 50% and up to 75% in Baoxin in cash at a price of HK$5.99, a 25.31% premium to Baoxin’s latest close at HK$4.80 on January 4th; 2). The acquisition proposal is subject to approval from regulatory bodies as well as shareholders of both companies — likely within 8 months from the announcement;

We removed the previous 50% percent probability discount on our 34% acquisition premium (derived with reference to the Changfeng-GAC deal in 2012; see our restack note of October 12, 2015), due to: 1) clarification of the proposed acquisition price; 2) potential for synergies between the two companies due to their complementary brand mixes and geographic coverage; 3) the Chinese government is encouraging consolidation in the auto dealer space due to : a) low industry profitability; b) low level of consolidation (top 10 dealer groups only have 15% market share in China).

Exhibit 41: Changfeng share price performed strongly during the restructuring period Share price performance event study


11.0

12.0

13.0

14.0

15.0

16.0

17.0

18.0

19.0

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb-

11

Mar

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Aug

-11

Sep-

11

Oct

-11

Nov

-11

Dec

-11

Jan-

12

Feb-

12

Mar

-12

Changfeng trading price Cash alternative price

On Oct. 27, 2010, Changfeng halted trading due to potential project in discussion with GAC

On Mar. 27, 2011, Changfengannounced GAC Group's proposal to merge Changfeng by stock swap with GAC(A) at 1:1.6 or cash alternative at Rmb12.65 per share

On Jun. 14, 2011, ChangfengGroup decided to choose cash alternative at Rmb12.65 per share

On Mar. 20, 2012, Changfeng delisted as merged with GAC Group

Cash alternative price at Rmb12.65, proposed by GAC Group, derived from 20 day average trading price before pricing date, serves as stock price downside protection

2016 年 2 月 23 日中国：汽车


Baoxin (1293.HK): Summary financials



Cost of goods sold (27,603.6) (22,939.4) (25,622.0) (26,602.5) Accounts receivable 446.9 399.3 548.2 494.7

SG&A (1,592.0) (1,359.6) (1,450.2) (1,521.7) Inventory 3,056.8 2,096.7 3,519.0 2,915.3



EBITDA 1,920.5 1,809.8 2,188.7 2,427.2 Net PP&E 3,788.5 4,140.7 4,464.5 4,724.8

Depreciation & amortization (332.2) (356.2) (381.1) (400.5) Net intangibles 1,022.9 973.6 924.2 874.9

EBIT 1,588.3 1,453.6 1,807.7 2,026.7 Total investments 61.6 50.1 52.6 59.0



Income/(loss) from uncons. subs. 0.0 (10.0) 0.0 0.0


Pretax profits 1,039.7 907.2 1,198.9 1,479.1 Short-term debt 5,107.4 7,107.4 7,107.4 6,607.4

Income tax (326.1) (229.3) (299.7) (369.8) Other current liabilities 1,301.9 1,192.8 1,513.1 1,184.3


Long-term debt 3,017.2 3,017.2 3,017.2 3,017.2

Net income pre-preferred dividends 706.6 672.0 892.6 1,102.4 Other long-term liabilities 323.1 339.2 339.7 340.2


Net income (pre-exceptionals) 706.6 672.0 892.6 1,102.4 Total liabilities 14,627.5 13,063.6 17,590.3 14,793.4


Net income 706.6 672.0 892.6 1,102.4 Preferred shares 0.0 0.0 0.0 0.0





DPS (Rmb) 0.04 0.04 0.07 0.10


Free cash flow yield (%) 2.1 (7.4) 25.5 (4.4)


Sales growth 2.1 (16.2) 12.0 4.4 CROCI (%) 24.9 14.7 15.4 16.2

EBITDA growth (2.4) (5.8) 20.9 10.9 ROE (%) 14.5 12.5 14.8 16.2

EBIT growth (6.2) (8.5) 24.4 12.1 ROA (%) 3.8 3.5 4.2 4.8

Net income growth (29.8) (4.9) 32.8 23.5 ROACE (%) 10.5 9.4 11.7 13.3

EPS growth (29.8) (4.9) 32.8 23.5 Inventory days 40.1 41.0 40.0 44.1



EBIT margin 5.2 5.6 6.3 6.7 Net debt/equity (%) 115.0 118.0 67.4 67.9



Net income pre-preferred dividends 706.6 672.0 892.6 1,102.4



Net (inc)/dec working capital 587.4 (2,463.4) 2,634.9 (1,311.5) EV/EBITDA (X) 9.5 9.2 6.5 6.1

Other operating cash flow (155.2) 1,340.9 (763.3) (33.7) EV/GCI (X) 1.9 1.4 1.4 1.2

Cash flow from operations 1,478.1 (88.4) 3,151.8 164.6 Dividend yield (%) 0.8 1.0 1.8 2.7

Capital expenditures (1,221.9) (635.1) (639.1) (595.5)



Others (584.9) (13.4) (5.4) (4.3)

Cash flow from investments (1,655.7) (648.5) (644.5) (599.9)


Inc/(dec) in debt 662.1 2,000.0 0.0 (500.0)



Cash flow from financing 359.6 1,898.8 (96.3) (672.5)

Total cash flow 182.0 1,161.8 2,411.0 (1,107.7) Note: Last actual year may include reported and estimated data.


2016 年 2 月 23 日中国：汽车


Weichai H (2338.HK): Summary financials




SG&A (11,493.3) (13,392.2) (13,490.5) (13,902.7) Inventory 12,614.7 10,992.0 10,963.5 11,176.3



EBITDA 9,088.1 7,767.5 7,163.1 7,674.5 Net PP&E 25,642.6 24,576.8 23,921.2 23,383.4


EBIT 5,330.0 3,723.5 3,108.6 3,505.1 Total investments 2,431.5 2,686.5 2,907.4 3,128.4

Interest income 689.2 909.4 1,018.6 1,092.8 Other long-term assets 6,903.1 6,903.1 6,903.1 6,903.1

Interest expense (973.3) (1,380.8) (1,278.7) (1,208.6) Total assets 120,411.7 118,338.8 119,903.3 122,368.6


Others 1,816.1 (354.1) 421.5 676.4 Accounts payable 28,269.0 24,632.6 24,568.5 25,045.5


Income tax (1,181.2) (861.6) (1,003.2) (1,285.9) Other current liabilities 17,025.2 17,091.1 17,100.2 17,140.1

Minorities (760.0) (828.0) (988.0) (1,341.4) Total current liabilities 48,060.0 44,389.5 44,234.6 44,651.5

Long-term debt 13,106.5 13,106.5 13,106.5 13,106.5







EPS (basic, pre-except) (Rmb) 1.26 0.37 0.38 0.41 Minority interest 8,386.7 8,876.7 9,461.4 10,255.2



DPS (Rmb) 0.07 0.09 0.09 0.10


Free cash flow yield (%) 14.6 10.2 10.0 10.0


Sales growth 36.6 (8.8) (0.9) 2.7 CROCI (%) 31.6 11.8 10.9 11.1

EBITDA growth 35.6 (14.5) (7.8) 7.1 ROE (%) 16.7 4.4 4.4 4.7

EBIT growth 12.4 (30.1) (16.5) 12.8 ROA (%) 5.1 1.2 1.3 1.4

Net income growth 40.7 (70.9) 2.5 10.6 ROACE (%) 18.8 8.3 8.8 10.3

EPS growth 40.7 (70.9) 2.5 10.6 Inventory days 65.5 83.7 78.1 77.2








Minorities interests add-back 760.0 828.0 988.0 1,341.4 P/B (X) 1.5 0.8 0.7 0.7

Net (inc)/dec working capital (3,604.3) 129.2 159.9 (322.1) EV/EBITDA (X) 5.2 2.9 2.9 2.5

Other operating cash flow 5,494.4 55.6 (210.9) (210.9) EV/GCI (X) 0.8 0.4 0.3 0.3

Cash flow from operations 11,432.7 6,520.1 6,491.2 6,637.1 Dividend yield (%) 0.6 1.4 1.5 1.6




Others 761.2 0.0 0.0 0.0

Cash flow from investments (2,129.8) (3,018.0) (2,991.4) (3,071.2)


Inc/(dec) in debt (3,999.0) (100.0) (100.0) (100.0)


Other financing cash flows 3,164.8 4,545.1 (1,429.1) (1,560.3)

Cash flow from financing (1,434.0) 4,145.2 (1,895.0) (2,035.2)

Total cash flow 7,868.9 7,647.3 1,604.8 1,530.7 Note: Last actual year may include reported and estimated data.


2016 年 2 月 23 日中国：汽车


Weichai: We increase conglomerate discount to 12% with the higher share of Kion in the valuation Empirical examples suggest on average 30% accessible asset valuation discount for a holding company in the China conglomerate sector (see Exhibit 42). Previously we applied a 5% conglomerate discount for Weichai’s SOTP (see: Weichai Power (H): Up to Neutral after pullback; softer HDT outlook fully priced in; July 4, 2013). Now, with its 38% holding in Kion (also accessible asset via other listcos) making up c.42% of Weichai’s total SOTP valuation (before conglomerate discount), we apply a 12% (42%*30%) overall conglomerate discount to Weichai’s total valuation.

Exhibit 42: We see average 30% accessible asset valuation discount under holding companies Summary of accessible asset valuation discount of holding companies

Exhibit 43: We increase conglomerate discount from 5% to 12% due to increased Kion portion in Weichai valuation Conglomerate discount changes in Weichai valuation

Source: Datastream, Company data, Goldman Sachs Global Investment Research

Source: Datastream, Company data, Goldman Sachs Global Investment Research, Gao Hua Securities Research

Company Asset % accessiable via

other listcos

Average historical NAV discount

Melco International 99% 25%Hang Lung Group 92% 20%Wheelock 83% 30%Jardine Matheson 86% 30%Average 90% 26%

Derived valution discount on accessiable asset under the holding company 30% derived by 26%/90%

Date 6/30/2013 2/4/2016Weichai Market Cap (US$ mn) 5,713 4,218 Kion Market Cap (US$ mn) 3,062 4,585 Weichai stake in Kion 30% 38%Kion value as % of Weichai Market Cap 16% 42%Conglomerate discount (30%*Kion value as % of Weichai Market Cap) 5% 12%

2016 年 2 月 23 日中国：汽车


Appendix: Global autos valuation comparison

Exhibit 44: Valuation summary: Global auto companies

* denotes stock is on our Regional Conviction List Note: BBG consensus used for NC stocks. NA=Not Applicable.

Source: Datastream, Bloomberg, Company data, Goldman Sachs Global Investment Research, Gao Hua Securities Research.

Valuation Summary - Auto ChinaTicker Company name Currency Close Rating Market cap EPS

2/18/2016 USD'mn

%15-18E CAGR 2015E 2016E 2017E 2018E 2015E 2016E 2017E 2018E 2015E 2016E 2017E 2018E 2015E 2016E 2017E 2018E 2015E 2016E 2017E 2018E

600104.SS SAIC CNY 18.75 Buy 24,468 3% 7.0X 6.1X 6.5X 6.3X 1.2X 1.1X 1.0X 0.9X 18% 19% 16% 15% 7% 8% 8% 8% 11% 27% 24% 22%0489.HK Dongfeng HKD 9.56 Buy* 10,578 2% 4.8X 4.5X 4.8X 4.7X 0.8X 0.7X 0.6X 0.6X 17% 17% 14% 12% 3% 3% 3% 3% 21% 21% 19% 2%2238.HK GAC HKD 7.43 Neutral 3,339 13% 9.5X 7.7X 7.2X 6.7X 1.1X 1.0X 0.9X 0.8X 11% 13% 13% 13% 3% 4% 4% 5% 18% 19% 18% 17%1114.HK Brilliance HKD 6.82 Neutral 4,402 10% 7.0X 6.7X 6.3X 5.4X 1.4X 1.1X 1.0X 0.8X 21% 19% 17% 16% 0% 0% 0% 0% 26% 23% 21% 20%000625.SZ Changan (A) CNY 14.80 Buy 9,528 7% 7.2X 5.6X 6.2X 5.9X 2.1X 1.7X 1.5X 1.3X 33% 34% 26% 24% 4% 7% 7% 8% 32% 30% 26% 24%200625.SZ Changan (B) HKD 14.58 Neutral 7,866 7% 5.7X 4.6X 5.2X 4.8X 1.8X 1.4X 1.2X 1.1X 33% 34% 26% 24% 5% 9% 9% 9% 32% 30% 26% 24%2333.HK Great Wall (H) HKD 5.76 Neutral 3,038 -5% 5.3X 5.5X 6.4X 6.3X 1.1X 1.0X 0.9X 0.8X 22% 19% 15% 13% 6% 5% 5% 5% 17% 22% 18% 16%601633.SS Great Wall (A) CNY 8.47 Neutral 10,958 -5% 9.6X 9.6X 11.2X 11.1X 2.0X 1.7X 1.6X 1.4X 22% 19% 15% 13% 3% 3% 3% 3% 17% 23% 19% 17%0175.HK Geely HKD 3.04 Neutral 2,282 25% 10.2X 7.1X 5.8X 5.4X 1.2X 1.0X 0.9X 0.8X 12% 16% 17% 16% 2% 3% 4% 4% 15% 22% 22% 21%600418.SS JAC CNY 10.31 Neutral 2,036 17% 17.3X 11.3X 11.2X 10.7X 2.0X 1.8X 1.7X 1.5X 12% 17% 15% 15% 2% 4% 4% 4% 6% 28% 26% 21%000800.SZ FAW Car CNY 12.76 Sell 3,182 72% NA 131.9X 111.3X 67.4X 2.4X 2.3X 2.3X 2.2X 1% 2% 2% 3% 0% 0% 0% 0% 5% 6% 6% 6%2338.HK Weichai (H) HKD 7.59 Neutral 1,949 7% 16.8X 17.1X 15.3X 14.1X 0.8X 0.7X 0.7X 0.7X 4% 4% 5% 5% 1% 1% 2% 2% 12% 11% 11% 11%000338.SZ Weichai (A) CNY 7.43 Neutral 2,276 7% 20.3X 19.8X 17.9X 16.5X 0.9X 0.9X 0.8X 0.8X 4% 4% 5% 5% 1% 1% 1% 2% 12% 10% 10% 10%3808.HK Sinotruk HKD 2.79 Neutral 989 -3% 19.5X 21.6X 21.6X 22.1X 0.3X 0.3X 0.3X 0.3X 2% 2% 2% 1% 2% 2% 2% 1% 13% 7% 6% 6%

China Average 14% 10.8X 18.5X 16.9X 13.4X 1.4X 1.2X 1.1X 1.0X 15% 16% 13% 13% 3% 4% 4% 4% 16% 19% 18% 15%China Average (excl. FAW Car) 8% 10.8X 9.8X 9.7X 9.2X 1.3X 1.1X 1.0X 0.9X 16% 17% 14% 13% 3% 4% 4% 4% 17% 21% 19% 16%China A share Average (excl. FAW Car) 6% 12.3X 10.5X 10.6X 10.1X 1.6X 1.4X 1.3X 1.2X 18% 19% 15% 15% 4% 5% 5% 5% 16% 24% 21% 19%China H average 7% 9.9X 9.4X 9.1X 8.7X 1.0X 0.9X 0.8X 0.7X 15% 15% 13% 13% 3% 3% 3% 4% 19% 19% 18% 14%

Valuation Summary - Global PeersTicker Company name Currency Close Rating Market cap EPS

2/18/2016 USD'mn


MRTI.BO Maruti Suzuki INR 3,655 Buy 16,138 30% 23.9X 23.4X 16.6X 13.6X 3.7X 4.1X 3.5X 3.0X 17% 19% 23% 24% 1% 1% 2% 2% 16% 20% 21% 23%TAMO.BO Tata Motors INR 314 Neutral 14,430 -8% 11.8X 10.2X 9.5X 9.6X 2.8X 1.3X 1.2X 1.1X 23% 15% 13% 12% NA 1% 1% 1% 17% 15% 14% 13%

India Average 11% 17.9X 16.8X 13.1X 11.6X 3.3X 2.7X 2.3X 2.0X 20% 17% 18% 18% 1% 1% 1% 1% 17% 17% 18% 18%005380.KS Hyundai Motor KRW 147,000 Neutral 30,222 0% 6.6X 5.8X 6.1X 6.1X 0.7X 0.6X 0.5X 0.5X 11% 10% 9% 8% 3% 3% 3% 2% 8% 8% 8% 7%000270.KS Kia Motors KRW 47,650 Sell 15,566 2% 7.4X 6.5X 7.0X 6.8X 0.8X 0.7X 0.6X 0.6X 11% 11% 10% 9% 2% 2% 2% 2% 10% 9% 8% 8%

Korea Average 1% 7.0X 6.2X 6.6X 6.5X 0.7X 0.6X 0.6X 0.5X 11% 11% 9% 9% 2% 3% 3% 2% 9% 9% 8% 8%PEUP.PA Peugeot EUR 13.50 Buy 12,038 3% 6.4X 6.3X 6.1X 5.9X 0.9X 0.8X 0.7X 0.7X 16% 14% 13% 12% 0% 0% 0% 0% 5% 7% 7% 6%VOLVb.ST Volvo SEK 86.10 Neutral 22,182 3% 13.0X 12.9X 11.2X 10.5X 2.3X 1.9X 1.7X 1.6X 19% 16% 16% 16% 3% 3% 4% 4% 11% 12% 12% 12%RENA.PA Renault EUR 80.61 Neutral 26,540 5% 7.0X 6.9X 6.2X 6.0X 0.9X 0.8X 0.8X 0.7X 12% 11% 12% 11% 3% 4% 4% 4% 7% 7% 8% 7%BMWG.DE BMW EUR 75.35 Sell 54,290 6% 7.9X 7.5X 7.0X 6.7X 1.2X 1.1X 1.0X 0.9X 16% 15% 15% 14% 4% 5% 5% 6% 13% 13% 13% 12%FCHA.MI FCA EUR 5.83 Buy* 9,805 32% 26.9X 4.0X 2.4X 2.3X 0.5X 0.5X 0.5X 0.4X 2% 15% 21% 18% 0% 0% 0% 0% 12% 12% 12% 12%DAIGn.DE Daimler AG EUR 64.72 Buy 77,086 1% 7.7X 7.5X 7.2X 7.4X 1.4X 1.2X 1.1X 1.1X 19% 18% 16% 15% 5% 6% 7% 7% 18% 16% 16% 15%VOWG_p.DEVolkswagen EUR 105.45 Sell 65,316 23% 8.7X 5.7X 5.1X 4.6X 0.6X 0.5X 0.5X 0.4X 14% 9% 10% 10% 2% 2% 3% 4% 9% 9% 9% 10%

Europe Average 11% 11.1X 7.3X 6.5X 6.2X 1.1X 1.0X 0.9X 0.8X 14% 14% 15% 14% 3% 3% 3% 3% 11% 11% 11% 11%7203.T Toyota Motor JPY 6,180 Buy 171,265 4% 9.7X 8.6X 8.3X 7.9X 1.3X 1.1X 1.0X 0.9X 14% 13% 12% 12% 3% 4% 4% 4% 17% 18% 18% 17%7269.T Suzuki Motor JPY 2,916 Neutral 14,219 16% 19.6X 11.6X 11.8X 10.9X 1.3X 1.3X 1.1X 1.0X 7% 10% 9% 9% 1% 1% 1% 1% 10% 12% 13% 14%7201.T Nissan Motor JPY 991 Neutral 36,201 7% 9.4X 7.5X 7.5X 7.3X 0.9X 0.8X 0.8X 0.7X 10% 11% 10% 10% 3% 4% 5% 5% 12% 9% 16% 15%7261.T Mazda Motor JPY 1,676 Buy* 8,765 5% 9.5X 6.2X 6.0X 5.5X 1.7X 1.0X 0.9X 0.8X 21% 17% 16% 15% 0% 2% 3% 4% 11% 11% 11% 12%7202.T Isuzu Motors JPY 1,140 Neutral 8,381 4% 10.3X 8.1X 7.9X 7.3X 1.6X 1.2X 1.0X 0.9X 17% 15% 14% 14% 2% 4% 4% 4% 9% 11% 10% 11%7267.T Honda Motor JPY 3,033 Buy 47,835 13% 13.6X 9.9X 8.6X 7.9X 1.0X 0.8X 0.7X 0.7X 8% 8% 9% 9% 2% 3% 4% 4% 15% 12% 12% 13%7205.T Hino Motors JPY 1,181 Neutral 5,899 5% 11.7X 8.9X 8.4X 7.9X 2.1X 1.4X 1.3X 1.1X 20% 17% 16% 15% 3% 3% 4% 4% 9% 10% 10% 10%7262.T Daihatsu Motor JPY 1,642 Neutral 6,123 -1% 10.7X 14.1X 12.7X 10.7X 1.2X 1.1X 1.0X 0.9X 12% 8% 8% 9% 3% 2% 2% 3% 9% 9% 9% 9%7270.T Fuji Heavy JPY 3,740 Neutral 25,543 16% 10.3X 6.9X 7.6X 7.2X 2.6X 2.2X 1.8X 1.5X 29% 36% 26% 23% 2% 4% 4% 4% 20% 37% 33% 33%

Japan Average 8% 11.6X 9.1X 8.8X 8.1X 1.5X 1.2X 1.1X 1.0X 15% 15% 13% 13% 2% 3% 3% 4% 12% 14% 15% 15%F Ford USD 12.26 Buy 48,660 2% 7.8X 6.1X 5.5X 6.0X 2.0X 1.4X 1.2X 1.1X 62% 48% 24% 19% 4% 5% 5% 5% 20% 16% 16% 13%GM GM USD 29.03 Neutral 45,084 -8% 6.8X 5.0X 5.0X 7.5X 1.4X 1.0X 0.9X 0.8X 22% 21% 18% 11% 4% 5% 5% 5% 18% 19% 18% 12%TSLA Tesla Motors USD 166.77 Neutral 23,806 144% NA NA 148.3X 38.7X 26.1X 20.7X 18.5X 12.9X -65% 18% 13% 40% 0% 0% 0% 0% -24% 11% 11% 19%

American Average 46% 7.3X 5.5X 52.9X 17.4X 9.8X 7.7X 6.9X 4.9X 6% 29% 19% 23% 3% 3% 3% 3% 5% 15% 15% 15%American Average (excl. Tesla) -3% 7.3X 5.5X 5.3X 6.8X 1.7X 1.2X 1.1X 1.0X 42% 35% 21% 15% 4% 5% 5% 5% 19% 18% 17% 13%

P/E P/B ROE Dividend yield CROCI


2016 年 2 月 23 日中国：汽车


Exhibit 44 cont'd: Valuation summary: Global auto component companies

* denotes stock is on our Regional Conviction List Note: BBG consensus used for NC stocks. NA=Not Applicable. Not Covered stocks include Nexteer, Xinchen


Valuation Summary - Global PartsTicker Company name Currency Close Rating Market cap EPS

2/18/2016 USD'mn


1316.HK Nexteer HKD 7.51 Not covered 2,412 0% 11.4X 9.4X 8.0X NA 2.7X 2.2X 1.8X NA 26% 25% 24% NA 2% 2% 2% NA NA NA NA NA1148.HK Xinchen HKD 1.27 Not covered 209 3% 4.4X 4.1X 3.7X NA 0.4X 0.4X 0.4X NA 9% 9% 9% NA NA NA 1% NA NA NA NA NA0425.HK Minth HKD 14.60 Neutral 1,790 12% 10.1X 8.7X 8.3X 7.4X 1.5X 1.3X 1.2X 1.1X 15% 16% 15% 16% 4% 5% 5% 5% 12% 18% 16% 17%3606.HK Fuyao (H) HKD 16.62 Neutral 5,354 19% 12.0X 10.3X 9.0X 7.4X 2.1X 1.9X 1.7X 1.5X 21% 19% 20% 22% 4% 5% 6% 7% 19% 19% 19% 20%600660.SS Fuyao (A) CNY 13.95 Neutral 5,362 19% 12.4X 10.2X 9.0X 7.4X 2.1X 1.9X 1.7X 1.5X 21% 19% 20% 22% 4% 5% 6% 7% 19% 19% 19% 20%600741.SS Huayu CNY 13.89 Neutral 5,498 -1% 7.5X 7.7X 8.0X 7.6X 1.3X 1.1X 1.0X 0.9X 19% 17% 13% 13% 4% 4% 4% 4% 22% 25% 16% 15%600699.SS Joyson CNY 31.25 Rating Suspended 3,274 31% 46.3X 35.5X 26.8X 20.6X 5.6X 4.9X 4.3X 3.7X 14% 15% 17% 19% 0% 1% 1% 1% 16% 16% 17% 19%000581.SZ Weifu (A) CNY 17.51 Neutral 2,737 10% 11.4X 10.6X 9.8X 8.6X 1.5X 1.3X 1.2X 1.1X 13% 13% 13% 14% 2% 3% 3% 4% 18% 19% 19% 5%200581.SZ Weifu (B) HKD 14.18 Neutral 1,857 10% 7.5X 7.3X 6.7X 5.8X 1.0X 0.9X 0.8X 0.8X 13% 13% 13% 14% 3% 4% 4% 5% 18% 19% 19% 5%

China avg. 11% 13.7X 11.5X 9.9X 9.3X 2.0X 1.8X 1.6X 1.5X 17% 16% 16% 17% 3% 3% 4% 5% 18% 19% 18% 14%012330.KS Hyundai Mobis KRW 259,500 Neutral 19,995 3% 7.1X 7.4X 7.5X NA 0.8X 0.8X 0.8X NA 13% 12% 11% NA 2% 1% 1% NA 9% 8% 7% NA161390.KS Hankook Tire KRW 49,400 Buy 4,985 11% 8.5X 8.2X 7.7X NA 1.1X 1.0X 0.9X NA 13% 13% 13% NA 1% 1% 1% NA 11% 11% 11% NA

Korea avg. 7% 7.8X 7.8X 7.6X NA 1.0X 0.9X 0.8X NA 13% 13% 12% NA 1% 1% 1% NA 10% 9% 9% NAALV Autoliv USD 109.66 Neutral 9,661 14% 22.1X 16.9X 14.8X 14.4X 2.9X 2.6X 2.5X 2.3X 9% 15% 17% 16% 2% 2% 3% 3% 8% 10% 11% 11%CNHI CNH Industrial USD 6.45 Neutral 8,778 50% 44.8X 20.4X 13.6X 10.7X 2.2X 1.8X 1.6X 1.4X 5% 9% 12% 14% 2% 2% 2% 4% 8% 8% 8% 8%CONG.DE Continental EUR 186.40 Buy* 41,507 10% 13.5X 11.9X 10.9X 10.1X 3.0X 2.5X 2.2X 1.9X 23% 22% 21% 19% 2% 2% 3% 3% 12% 12% 12% 12%EPED.PA Faurecia EUR 31.05 Buy 4,294 15% 10.5X 8.6X 7.7X 7.0X 1.9X 1.5X 1.3X 1.1X 22% 23% 20% 18% 2% 2% 3% 3% 12% 12% 12% 12%GKN.L GKN GBP 276.10 Buy 6,709 10% 12.9X 12.6X 10.8X 9.8X 2.4X 2.2X 2.0X 1.7X 21% 19% 19% 19% 3% 3% 4% 4% 9% 8% 9% 10%HLE.DE Hella KGaA Hueck EUR 35.56 Buy 4,398 12% 14.7X 13.8X 10.5X 9.3X 2.2X 2.0X 1.9X 1.7X 18% 15% 18% 19% 2% 2% 3% 3% 12% 12% 13% 14%MICP.PA Michelin EUR 85.06 Neutral 17,226 15% 13.6X 10.7X 9.7X 9.0X 1.7X 1.5X 1.4X 1.3X 12% 15% 15% 15% 3% 4% 4% 4% 9% 8% 8% 8%NRE1V.HE Nokian Renkaat EUR 33.72 Neutral 5,057 9% 15.8X 17.7X 15.4X 14.6X 3.1X 3.5X 3.3X 3.2X 20% 20% 22% 22% 5% 5% 5% 5% 16% 17% 16% 16%VLOF.PA Valeo EUR 118.75 Buy 10,397 10% 13.4X 11.7X 10.9X 10.0X 2.9X 2.4X 2.1X 1.9X 23% 23% 21% 20% 2% 3% 3% 3% 12% 12% 12% 12%

Europe avg. 16% 17.9X 13.8X 11.6X 10.5X 2.5X 2.2X 2.0X 1.8X 17% 18% 18% 18% 3% 3% 3% 4% 11% 11% 11% 11%7296.T FCC JPY 1,901.00 Neutral 835 14% 14.6X 12.4X 11.5X 9.8X 0.9X 0.8X 0.8X 0.7X 6% 7% 7% 8% 2% 2% 2% 3% 8% 9% 8% 9%7251.T Keihin JPY 1,602.00 Neutral 1,037 11% 10.9X 17.4X 8.2X 7.7X 0.7X 0.7X 0.6X 0.6X 7% 4% 8% 8% 2% 2% 2% 3% 8% 8% 9% 9%7230.T Nissin Kogyo JPY 1,430.00 Buy 812 10% 11.5X 7.7X 7.2X 6.6X 1.0X 0.7X 0.7X 0.6X 9% 9% 9% 9% 2% 3% 3% 4% 10% 10% 10% 11%6923.T Stanley Electric JPY 2,543.00 Neutral 3,750 11% 16.7X 16.9X 14.3X 12.5X 1.4X 1.4X 1.3X 1.2X 9% 8% 9% 10% 1% 1% 1% 2% 10% 9% 10% 11%7313.T TS Tech JPY 2,598.00 Neutral 1,546 5% 8.9X 7.7X 7.3X 6.9X 1.1X 0.9X 0.8X 0.7X 13% 12% 11% 11% 2% 3% 3% 3% 15% 15% 14% 14%7259.T Aisin Seiki JPY 4,530.00 Buy 11,170 15% 14.6X 13.5X 12.0X 10.8X 1.0X 1.1X 1.0X 0.9X 7% 8% 9% 9% 3% 2% 2% 3% 8% 9% 9% 9%5108.T Bridgestone JPY 3,909.00 Buy 26,772 14% 12.5X 9.2X 8.2X 7.8X 1.6X 1.3X 1.1X 1.1X 13% 14% 15% 14% 3% 4% 4% 5% 11% 10% 11% 11%6902.T Denso JPY 4,307.00 Neutral 30,374 0% 13.8X 13.6X 12.7X 11.8X 1.3X 1.0X 1.0X 0.9X 10% 8% 7% 8% 2% 3% 3% 3% 7% 8% 9% 9%5110.T Sumitomo Rubber InduJPY 1,637.00 Neutral 3,758 -2% 8.9X 8.7X 8.1X 7.7X 1.2X 0.9X 0.9X 0.8X 13% 11% 11% 11% 3% 3% 3% 3% 6% 8% 8% 9%3116.T Toyota Boshoku JPY 1,784.00 Neutral 2,893 89% 45.0X 11.4X 9.8X 9.4X 1.0X 1.3X 1.2X 1.1X 3% 14% 14% 13% 1% 2% 2% 2% 10% 11% 11% 10%7248.T Calsonic Kansei JPY 769.00 Sell 1,803 11% 8.4X 8.2X 7.7X 7.5X 0.8X 0.9X 0.8X 0.7X 11% 12% 11% 10% 1% 1% 1% 1% 7% 7% 7% 7%4246.T DaikyoNishikawa JPY 1,612.00 Buy 1,021 28% 7.2X 9.9X 9.0X 8.1X 1.2X 2.2X 1.9X 1.6X 18% 25% 23% 21% 2% 1% 2% 2% 18% 16% 16% 15%6201.T Toyota Industries JPY 4,900.00 Buy* 13,471 12% 15.0X 7.9X 10.3X 9.4X 0.7X 0.6X 0.6X 0.6X 6% 8% 6% 6% 2% 3% 3% 3% 4% 5% 4% 4%5949.T Unipres JPY 1,806.00 Neutral 708 28% 12.5X 8.6X 5.9X 5.1X 0.8X 0.7X 0.6X 0.5X 7% 8% 11% 11% 1% 2% 2% 2% 7% 8% 9% 9%

Japan avg. 18% 14.3X 10.9X 9.4X 8.7X 1.0X 1.0X 0.9X 0.9X 9% 11% 11% 11% 2% 2% 3% 3% 9% 9% 10% 10%LEA Lear Corp. USD 104.89 Neutral 7,999 10% 10.3X 8.6X 7.9X 7.4X 2.8X 2.3X 1.9X 1.6X 57% 53% 26% 24% 1% 1% 1% 1% 25% 30% 29% 26%DAN Dana USD 12.25 Neutral 1,936 -4% 6.6X 6.7X 6.7X 7.5X 2.1X 1.7X 1.4X 1.3X 28% 25% 22% 18% 2% 2% 2% 2% 13% 12% 12% 12%JCI Johnson Controls USD 35.70 Not Rated 23,141 11% 13.9X 9.5X 8.3X 7.7X 3.0X 2.0X 1.7X 1.5X 21% 22% 22% 21% 2% 3% 3% 4% 6% 12% 15% 15%MGA Magna USD 34.76 Neutral 14,199 12% 7.9X 6.8X 5.8X 5.6X 1.6X 1.5X 1.3X 1.1X 21% 22% 23% 21% 3% 3% 3% 3% 12% 14% 15% 13%BWA BorgWarner Inc. USD 32.64 Buy 7,235 12% 17.1X 9.9X 8.5X 7.6X 3.3X 1.8X 1.6X 1.4X 19% 19% 20% 19% 1% 2% 2% 2% 14% 15% 16% 15%CTB Cooper Tire & Rubber USD 36.25 Sell 2,055 -1% 10.8X 10.9X 11.0X 10.9X 2.2X 2.0X 1.7X 1.5X 22% 19% 17% 15% 1% 1% 1% 1% 12% 13% 12% 11%DLPH Delphi USD 65.37 Buy* 18,257 16% 15.4X 10.7X 9.0X 7.9X 10.2X 6.6X 5.0X 4.0X 119% 123% 62% 54% 1% 2% 2% 2% 24% 25% 24% 23%GT Goodyear USD 30.23 Buy 8,117 14% 9.0X 7.6X 6.4X 6.2X 2.0X 1.8X 1.4X 1.2X 24% 25% 24% 21% 1% 1% 1% 1% 8% 13% 13% 13%MTOR Meritor USD 7.48 Neutral 692 18% 8.5X 4.2X 3.3X 2.9X NA NA NA NA NA NA NA NA 0% 0% 0% 0% 9% 17% 16% 16%MPG Metaldyne USD 12.34 Neutral 831 6% 6.3X 5.9X 5.5X 5.4X 1.3X 1.1X 0.9X 0.8X 23% 21% 19% 17% 2% 3% 3% 3% 15% 14% 14% 13%NEMAKA.MXNemak MXN 22.24 Buy 3,729 10% 14.4X 12.0X 10.1X 9.6X 2.4X 2.0X 1.8X 1.5X 19% 18% 19% 17% 1% 2% 2% 2% 10% 14% 13% 13%TEN Tenneco Inc. USD 45.08 Neutral 2,588 9% 11.0X 8.1X 7.2X 7.2X 7.4X 4.9X 3.5X 2.5X 63% 68% 56% 40% 0% 0% 0% 0% 12% 15% 14% 14%

US avg. 9% 10.9X 8.4X 7.5X 7.2X 3.5X 2.5X 2.0X 1.7X 38% 38% 28% 24% 1% 2% 2% 2% 13% 16% 16% 15%

CROCIP/E P/B ROE Dividend yield

2016 年 2 月 23 日中国：汽车


Exhibit 44 cont'd: Valuation summary: Global auto dealer companies

Notes: BBG consensus used for NC stocks. NA=Not Applicable. Not Covered stocks include Yongda, Pangda, Yaxia, Sinomach, China Grand, Inchcape, Pendragon, Lookers, Autobacs Seven and Lithia Motors.


Valuation Summary - Auto Dealer ChinaTicker Company name Currency Close Rating Market cap EPS

2/18/2016 USD'mn%

15-18E CAGR

2015E 2016E 2017E 2018E 2015E 2016E 2017E 2018E 2015E 2016E 2017E 2018E 2015E 2016E 2017E 2018E 2015E 2016E 2017E 2018E

0881.HK Zhongsheng HKD 3.80 Sell 1,048 16% 9.0X 7.7X 6.9X 6.0X 0.6X 0.6X 0.5X 0.5X 6% 7% 8% 8% 2% 3% 3% 3% 8% 8% 8% 8%1728.HK Zhengtong HKD 2.98 Buy 846 8% 7.4X 6.7X 6.2X 6.0X 0.6X 0.6X 0.5X 0.5X 9% 9% 9% 9% 3% 3% 3% 3% 11% 12% 13% 13%1293.HK Baoxin HKD 4.56 Neutral 1,497 21% 14.1X 11.0X 8.9X 8.3X 1.7X 1.5X 1.4X 1.2X 12% 15% 16% 16% 1% 2% 3% 4% 15% 15% 16% 15%3836.HK Harmony HKD 4.88 Buy 987 16% 10.2X 9.1X 8.0X 6.8X 1.1X 1.0X 0.9X 0.8X 13% 11% 12% 13% 1% 1% 2% 3% 18% 19% 18% 17%3669.HK Yongda HKD 4.29 Not covered 816 21% 8.0X 6.5X 5.4X NA 1.1X 1.0X 0.9X NA 15% 16% 17% NA 2% 3% 4% NA NA NA NA NA

Off Shore Average 16% 9.7X 8.2X 7.1X 6.7X 1.0X 0.9X 0.8X 0.8X 11% 12% 12% 11% 2% 2% 3% 3% 13% 13% 14% 13%601258.SS Pangda CNY 2.98 Not covered 2,963 NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA002607.SZ Yaxia CNY 10.52 Not covered 576 17% 90.8X 76.8X 66.6X NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA600335.SS Sinomach CNY 13.43 Not covered 1,292 5% 7.9X 7.5X NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA600297.SS China Grand CNY 13.09 Not covered 11,047 29% 30.8X 22.2X 18.6X NA 3.0X 3.0X 2.6X NA 11% 14% 14% NA NA NA NA NA NA NA NA NA

On Shore Average 17% 43.2X 35.5X 42.6X NA 3.0X 3.0X 2.6X NA 11% 14% 14% NA NA NA NA NA NA NA NA NA

Valuation Summary - Global PeersTicker Company name Currency Close Rating Market cap EPS

2/18/2016 USD'mn%

15-18E CAGR

2015E 2016E 2017E 2018E 2015E 2016E 2017E 2018E 2015E 2016E 2017E 2018E 2015E 2016E 2017E 2018E 2015E 2016E 2017E 2018E

ASII.JK Astra International IDR 7,050 Neutral 21,126 11% 17.5X 15.9X 14.3X NA 2.8X 2.5X 2.3X NA 16% 17% 17% NA 3% 3% 3% NA 14% 13% 12% NAAEJ Average 11% 17.5X 15.9X 14.3X NA 2.8X 2.5X 2.3X NA 16% 17% 17% NA 3% 3% 3% NA 14% 13% 12% NA

INCH.L Inchcape GBP 721.00 Not covered 4,485 9% 13.3X 12.1X 11.3X 10.3X 2.2X 2.1X 1.9X 1.7X 18% 18% 17% 16% 3% 4% 4% 4% NA NA NA NAPDG.L Pendragon GBP 39.13 Not covered 821 9% 10.0X 9.5X 9.0X 7.8X NA NA NA NA NA NA NA NA 4% 4% 4% 5% NA NA NA NALOOK.L Lookers GBP 155.00 Not covered 882 8% 10.4X 9.2X 8.7X 8.3X 1.4X 1.3X 1.1X NA 17% 16% 13% NA 2% 2% 3% 3% NA NA NA NA

Europe Average 8% 11.2X 10.3X 9.7X 8.8X 1.8X 1.7X 1.5X 1.7X 17% 17% 15% 16% 3% 3% 3% 4% NA NA NA NA7599.T Gulliver International JPY 1,114.00 Buy 988 45% 27.0X 20.6X 13.7X 11.4X 2.3X 2.7X 2.3X 2.1X 9% 14% 18% 19% 2% 1% 2% 3% 8% 10% 11% 11%4732.T USS JPY 1,556.00 Buy 3,519 8% 20.9X 16.7X 15.6X 14.7X 3.2X 2.6X 2.6X 2.4X 16% 16% 17% 17% 2% 3% 3% 3% 18% 19% 19% 19%9832.T Autobacs Seven JPY 1,916.00 Not covered 1,466 6% 31.9X 29.7X 22.2X 26.9X NA NA NA NA NA NA NA NA 4% 4% 4% 4% NA NA NA NA

Japan Average 19% 26.6X 22.3X 17.2X 17.7X 2.7X 2.6X 2.5X 2.2X 12% 15% 17% 18% 2% 3% 3% 3% 13% 14% 15% 15%SAH Sonic USD 16.67 Neutral 846 1% 8.3X 7.7X 7.2X 7.9X 1.2X 1.1X 1.0X 0.9X 12% 15% 14% 11% 1% 1% 1% 1% 6% 6% 5% 6%GPI Group 1 USD 52.01 Neutral 1,259 5% 12.4X 7.2X 6.3X 6.6X 2.2X 1.2X 1.0X 0.9X 17% 17% 17% 15% 1% 2% 2% 2% 8% 7% 7% 7%AN AutoNation USD 49.95 Neutral 5,962 2% 15.6X 11.3X 10.3X 11.7X 3.0X 2.1X 1.8X 1.7X 21% 19% 19% 15% 0% 0% 0% 0% 9% 8% 8% 8%PAG Penske USD 34.63 Sell 3,125 2% 13.6X 9.5X 8.7X 8.9X 2.4X 1.5X 1.3X 1.2X 19% 16% 16% 14% 2% 3% 3% 3% 8% 7% 6% 7%LAD Lithia Motors USD 85.87 Not covered 2,254 13% 11.4X 10.5X 9.4X 8.2X 2.5X 2.1X 1.8X 1.5X 25% 22% 21% NA 1% 1% 0% NA 0% 0% 0% 0%

US Average 5% 12.2X 9.2X 8.4X 8.7X 2.3X 1.6X 1.4X 1.2X 19% 18% 17% 14% 1% 1% 1% 1% 6% 6% 5% 5%



2016 年 2 月 23 日中国：汽车


信息披露附录申明我们，杨一朋、丁妤倩，在此申明，本报告所表述的所有观点准确反映了我们对上述公司或其证券的个人看法。此外，我们的薪金的任何部分不曾与，不与，也将不会与本报告中的具体推荐意见或观点直接或间

接相关。

投资摘要投资摘要部分通过将一只股票的主要指标与其行业和市场相比较来评价该股的投资环境。所描述的四个主要指标包括增长、回报、估值倍数和波动性。增长、回报和估值倍数都是运用数种方法综合计算而成，以确

定该股在地区研究行业内所处的百分位排名。

每项指标的准确计算方式可能随着财务年度、行业和所属地区的不同而有所变化，但标准方法如下：

增长是下一年预测与当前年度预测的综合比较，如每股盈利、EBITDA 和收入等。回报是各项资本回报指标一年预测的加总，如 CROCI、平均运用资本回报率和净资产回报率。估值倍数根据一年预期估值比率综

合计算，如市盈率、股息收益率、EV/FCF、EV/EBITDA、EV/DACF、市净率。波动性根据 12个月的历史波动性计算并经股息调整。

Quantum Quantum 是提供具体财务报表数据历史、预测和比率的高盛专有数据库，它可以用于对单一公司的深入分析，或在不同行业和市场的公司之间进行比较。

GS SUSTAIN GS SUSTAIN是侧重于长期做多建议的相对稳定的全球投资策略。GS SUSTAIN关注名单涵盖了我们认为相对于全球同业具有持续竞争优势和出色的资本回报、因而有望在长期内表现出色的行业领军企业。我们

对领军企业的筛选基于对以下三方面的量化分析：现金投资的现金回报、行业地位和管理水平（公司管理层对行业面临的环境、社会和企业治理方面管理的有效性）。

信息披露

相关的股票研究范围杨一朋：中国汽车行业。丁妤倩：中国汽车行业。

中国汽车行业：江淮汽车、宝信、华晨汽车、比亚迪、和谐汽车、长安汽车 A、长安汽车 B、东风集团、一汽轿车、福耀玻璃(A)、福耀玻璃(H)、吉利汽车、长城汽车(H)、长城汽车(A)、广汽集团、华域汽车、敏实

集团、上汽集团、中国重汽、潍柴动力(A)、潍柴动力(H)、威孚高科 A、威孚高科 B、正通汽车、中升集团。

与公司有关的法定披露以下信息披露了高盛高华证券有限责任公司（“高盛高华”）与北京高华证券有限责任公司（“高华证券”）投资研究部所研究的并在本研究报告中提及的公司之间的关系。

高盛高华在过去 12个月中曾从下述公司获得投资银行服务报酬：和谐汽车 (HK$4.96)、广汽集团 (HK$7.35)、潍柴动力(A) (Rmb7.65)、潍柴动力(H) (HK$7.39)

高盛高华在今后 3个月中预计将从下述公司获得或寻求获得投资银行服务报酬：和谐汽车 (HK$4.96)、东风集团 (HK$9.98)、吉利汽车 (HK$3.13)、长城汽车(H) (HK$5.87)、长城汽车(A) (Rmb9.19)、广汽集团 (HK$7.35)、华域汽车 (Rmb14.14)、上汽集团 (Rmb18.89)、潍柴动力(A) (Rmb7.65)、潍柴动力(H) (HK$7.39)、中升集团 (HK$3.73)

高盛高华在过去 12个月中与下述公司存在投资银行客户关系：和谐汽车 (HK$4.96)、吉利汽车 (HK$3.13)、长城汽车(H) (HK$5.87)、长城汽车(A) (Rmb9.19)、广汽集团 (HK$7.35)、上汽集团 (Rmb18.89)、潍柴动

力(A) (Rmb7.65)、潍柴动力(H) (HK$7.39)、中升集团 (HK$3.73)

没有对下述公司的具体信息披露：江淮汽车 (Rmb10.74)、宝信 (HK$4.52)、华晨汽车 (HK$6.64)、长安汽车 A (Rmb15.32)、长安汽车 B (HK$15.17)、一汽轿车 (Rmb13.35)、敏实集团 (HK$14.78)、中国重汽 (HK$2.81)、威孚高科 A (Rmb18.78)、威孚高科 B (HK$15.01)、正通汽车 (HK$2.94)

公司评级、研究行业及评级和相关定义买入、中性、卖出：分析师建议将评为买入或卖出的股票纳入地区投资名单。一只股票在投资名单中评为买入或卖出由其相对于所属研究行业的潜在回报决定。任何未获得买入或卖出评级的股票均被视为中性评

级。每个地区投资评估委员会根据 25-35%的股票评级为买入、10-15%的股票评级为卖出的全球指导原则来管理该地区的投资名单；但是，在某一特定行业买入和卖出评级的分布可能根据地区投资评估委员会的决

定而有所不同。地区强力买入或卖出名单是以潜在回报规模或实现回报的可能性为主要依据的投资建议。

潜在回报：代表当前股价与一定时间范围内预测目标价格之差。分析师被要求对研究范围内的所有股票给出目标价格。潜在回报、目标价格及相关时间范围在每份加入投资名单或重申维持在投资名单的研究报告中

都有注明。

研究行业及评级：分析师给出下列评级中的其中一项代表其根据行业历史基本面及／或估值对研究对象的投资前景的看法。具吸引力(A)：未来 12个月内投资前景优于研究范围的历史基本面及／或估值。中性(N)：未来 12个月内投资前景相对研究范围的历史基本面及／或估值持平。谨慎(C)：未来 12个月内投资前景劣于研究范围的历史基本面及／或估值。

2016 年 2 月 23 日中国：汽车


暂无评级(NR)：在高盛高华于涉及该公司的一项合并交易或战略性交易中担任咨询顾问时并在某些其他情况下，投资评级和目标价格已经根据高华证券的政策予以除去。暂停评级(RS)：由于缺乏足够的基础去确定

投资评级或价格目标，或在发表报告方面存在法律、监管或政策的限制，我们已经暂停对这种股票给予投资评级和价格目标。此前对这种股票作出的投资评级和价格目标(如有的话)将不再有效，因此投资者不应依

赖该等资料。暂停研究(CS)：我们已经暂停对该公司的研究。没有研究(NC)：我们没有对该公司进行研究。不存在或不适用(NA)：此资料不存在或不适用。无意义(NM)：此资料无意义，因此不包括在报告内。

一般披露本报告在中国由高华证券分发。高华证券具备证券投资咨询业务资格。

本研究报告仅供我们的客户使用。本研究报告是基于我们认为可靠的目前已公开的信息，但我们不保证该信息的准确性和完整性，客户也不应该依赖该信息是准确和完整的。我们会适时地更新我们的研究，但各种

规定可能会阻止我们这样做。除了一些定期出版的行业报告之外，绝大多数报告是在分析师认为适当的时候不定期地出版。

高盛高华为高华证券的关联机构，从事投资银行业务。高华证券、高盛高华及它们的关联机构与本报告中涉及的大部分公司保持着投资银行业务和其它业务关系。

我们的销售人员、交易员和其它专业人员可能会向我们的客户及自营交易部提供与本研究报告中的观点截然相反的口头或书面市场评论或交易策略。我们的资产管理部门、自营交易部和投资业务部可能会做出与本

报告的建议或表达的意见不一致的投资决策。

本报告中署名的分析师可能已经与包括高华证券销售人员和交易员在内的我们的客户讨论，或在本报告中讨论交易策略，其中提及可能会对本报告讨论的证券市场价格产生短期影响的推动因素或事件，该影响在方

向上可能与分析师发布的股票目标价格相反。任何此类交易策略都区别于且不影响分析师对于该股的基本评级，此类评级反映了某只股票相对于报告中描述的研究范围内股票的回报潜力。

高华证券及其关联机构、高级职员、董事和雇员，不包括股票分析师和信贷分析师，将不时地对本研究报告所涉及的证券或衍生工具持有多头或空头头寸，担任上述证券或衍生工具的交易对手，或买卖上述证券或

衍生工具。

在高盛组织的会议上的第三方演讲嘉宾（包括高华证券或高盛其它部门人员）的观点不一定反映全球投资研究部的观点，也并非高华证券或高盛的正式观点。

在任何要约出售股票或征求购买股票要约的行为为非法的地区，本报告不构成该等出售要约或征求购买要约。本报告不构成个人投资建议，也没有考虑到个别客户特殊的投资目标、财务状况或需求。客户应考虑本

报告中的任何意见或建议是否符合其特定状况，以及(若有必要)寻求专家的意见，包括税务意见。本报告中提及的投资价格和价值以及这些投资带来的收入可能会波动。过去的表现并不代表未来的表现，未来的回

报也无法保证，投资者可能会损失本金。

某些交易，包括牵涉期货、期权和其它衍生工具的交易，有很大的风险，因此并不适合所有投资者。外汇汇率波动有可能对某些投资的价值或价格或来自这一投资的收入产生不良影响。

投资者可以向高华销售代表取得或通过 http://www.theocc.com/about/publications/character-risks.jsp取得当前的期权披露文件。对于包含多重期权买卖的期权策略结构产品，例如，期权差价结构产品，其交易成本

可能较高。与交易相关的文件将根据要求提供。

所有研究报告均以电子出版物的形式刊登在高华客户网上并向所有客户同步提供。高华未授权任何第三方整合者转发其研究报告。有关某特定证券的研究报告、模型或其它数据，请联络您的销售代表。

北京高华证券有限责任公司版权所有 © 2016 年

未经北京高华证券有限责任公司事先书面同意，本材料的任何部分均不得(i)以任何方式制作任何形式的拷贝、复印件或复制品，或(ii)再次分发。

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