Author

章晶小姐 (Zhang Jing)
高級分析師

本科畢業於同濟大學工科，碩士畢業於華東師範大學金融貿系。現為輝立証券持牌高級分析師，主要負責汽車及航空板塊的研究，曾獲得《華爾街日報》亞洲區2012年度汽車及零部件最佳分析師第二名，擅長將行業前景與上市公司結合分析。

Bachelor Degree in Tongji University of Engineering; Master Degree in East China Normal University of finance. Currently cover automobile and air sectors. Having worked in research for years and is good at combining analysis for the companies with industry prospects.

Phone:	86 21 51699400-103	Email:	zhangjing@phillip.com.cn
For Research Report and Business enquiry

Brilliance China (1114.HK) - The sales volume of the New 5 Series was better than expectation

Thursday, August 3, 2017

14193

Brilliance China(1114)

Recommendation on 3 August 2017
Recommendation	Accumulate
Price on Recommendation Date	$19.300
Target Price	$23.000

Weekly Special - 603179.CH Xinquan

Investment Summary

The growth rate of sales volume of BMW Brilliance was more than 30% in H1 2017 beyond expectations. We held optimistic expectations of the New 5 Series and the subsequent Domestic X3, and it helped to reduce the book loss by selling the business stake of light-duty passenger vehicles. Therefore, we adjusted the 2017/2018 diluted EPS of the Company to RMB0.908/1.26, raised the target price to HKD23, equivalent to 14.7/10.5x P/E ratio of 2017/2018, and maintained the "overweight" rating.

The sales volume of BMW Brilliance was thirty percent more in H1

In H1 2017, a total of 185,000 BMW Brilliance cars were sold, up 30% yoy. Although the sales volume of 5 Series cars was affected by the upgrading replacement, down about 15% yoy, the Company still reported good sales results in H1 since demand for SUV Models X1, 3 Series was strong and New Models 2 Series Wagon and 1 Series Sedan were newly launched. X1`s monthly average sales volume increased largely from 3,000 in the same period to 7,000, and 3 Series monthly average sales volume also increased from 8,000 to about 10,000.

The sales volume of the New 5 Series was better than expectation

BMW Brilliance new generation - 5 series would be launched in May, the latest two months` sales volumes of which were 4,694 and 5,275, respectively. It was still in a stable climbing stage with good terminal demand. We expected that the sales volume of 5 series cars would hit a breakout period with gradual release of the production capacity of Dadong pant. Moreover, the sales boom of the new 5 series would be expected to boost overall profitability compared with old models with larger discounts.

The Company proposed Renault for becoming a shareholder for its light-duty passenger vehicle business

The Company recently issued a notice that it would carry on asset reorganization for its light-duty passenger vehicle business with loss and would sell 49% equity of Shenyang Brilliance Jinbei Automobile Co., Ltd. to Renault at the price of RMB1. After selling, the Company and Renault would also invest RMB1.5 billion registered capital in this company, and both sides would assign 4 to 5 representatives to the Board of Directors.

Due to the lack of strong competitiveness of products and other reasons, the Company`s profitability of its main light-duty passenger vehicle business went downhill and it was currently in a serious loss to insolvent. Short-term sale of shares would help to reduce the burden of loss and improve cash flow. Judging from long-term and medium-term development, it is hopeful to reshape competitiveness of the Company`s light-duty passenger vehicle products as Renault`s light-duty passenger vehicle`s market share is 16% in Europe with mature advanced production technology, product lines and huge sales network and its European-style light-duty passenger vehicle design is in line with the future direction of development.

Financials

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