SAIC Group (600104): Production and sales growth is expected to gradually improve in the second half of the year

SAIC Group (600104): Production and sales growth is expected to gradually improve in the second half of the year

Investment Summary In the first half of 2019, the Group’s cumulative sales volume was 293.

70,000, a decrease of 16 a year.

62%.

As a result of increased model promotion efforts, SAIC-GM’s sales performance has been better, and the decline has narrowed slightly; SAIC-Volkswagen / SAIC passenger cars continue to be replaced but the retail side has recovered; SAIC-GM-Wuling continues to be under pressure.

We believe that joint-venture brands with strong product cycles, such as Shanghai Volkswagen, are the main support for the company’s stable performance and better than the industry average; under the background of the continued downturn in the industry and the pressure of price cuts in the auto market, the company’s independent brand expansion road orThere will be certain challenges.

The domestic automobile market was sluggish in the first half of 2019. The company’s sales pressure was affected by factors such as the vertical growth of the macro economy, trade friction between China and the United States, and declining consumer confidence.At the same time, the country ‘s five countries ‘six standards are changing and the auto stimulus policy is still brewing, which has made potential buyers’ wait-and-see mentality worse. Wholesale car sales have recorded monthly double-digit setbacks for several months in a row.

Sales data released by SAIC Group shows that the Group’s cumulative sales volume in the first half of 2019 was 293.

70,000, 合肥夜网 a decrease of 16 a year.

62%.

Among them, SAIC Volkswagen produced 91.

90,000 vehicles, down 9 each year.

9%; SAIC-GM sales of 83.

40,000 vehicles, a decrease of 12 per year.

9%; SAIC-GM-Wuling sales were 74.

40,000 vehicles, down 29 every year.

2%; SAIC passenger car sales were 31.

10,000 vehicles, down 13 each year.

2%.

Overall, SAIC-GM ‘s sales performance has been better and its decline has narrowed due to the increase in the promotion of larger models. SAIC-Volkswagen / SAIC passenger cars continue to expand but the retail side has recovered; SAIC-GM-Wuling continues to be under pressure.

In the second half of the year, the growth rate of production and sales is expected to gradually improve to accelerate the de-stocking of the National V model. SAIC Group increased its support in the early stage and introduced a 3 billion red envelope discount to support the replacement of old vehicles with National Standard III and below in Shanghai.

Supported by the increase in terminal discounts for existing models, terminal demand has improved in June. We expect the base to fall in the second half of the year, and the gradual reduction will gradually narrow.

SAIC Volkswagen’s new models in 2019 include T-Cross, a new generation of Polo, a new speed, Touran COUPE, SAIC-GM will launch new Angola, Blazer, Cadillac CT4 / CT5 / XT6, etc. to collaborate on new energy modelsFang will also gradually cover the hybrid version of the existing model and the new pure electric version.

SAIC Roewe’s RX5 MAX will be launched soon, and Roewe and MG each have several new energy models.

We believe that the intensive launch of new models and the best pick-up of National Six models will help the company’s overall bicycle prices to improve in the second half of the year.

The worst time may have passed. Changes in the industry structure are conducive to the right-hand car companies. We believe that the slowdown in the domestic auto market has experienced rapid growth for many years, and the need for self-adjustment after the base has been expanded. The macroeconomic environment and the Sino-US trade war have weighed on consumer confidence.This is an important reason. The industry policy of a combination of severely degraded emission standards and new energy supplements has exacerbated the reshuffle of the industry.

From the perspective of new model declarations and existing model reserves, the future trend of the industry pattern will become more and more obvious. The favorable market share will lead the development, R & D contribution, and complete product lineage. The company is expected to be in the second half of the auto market recovery.Relatively favorable territory.

Investment recommendations We conservatively expect SAIC’s EPS to be 2 in 2019/2020.

77/2.

97 yuan, considering that the company’s relatively high cash dividend ratio is also a guarantee to maintain a stable expected level, adjust the target price to 25.

3 RMB, corresponding to 9/2019/2020.

1/8.

5 times expected P / E ratio, 1.

2/1.

1x estimated P / B ratio, hold rating.

(Current price as of July 24)

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