标题：China Grand Automotive Investment Value Analysis：Auto finance and used vehicles to drive earnings growth
发布日期：2016-03-23 13:26:49
内容： Company overview: China’s No. 1 auto dealer is on its way tobecoming the world’s largest auto dealership group. CGA has an excellent DNA in M&As Auto financial leasing could be accretive to the Company over themedium-to-longer term. The market for used cars is bound to flourish and may serve as asecular growth driver for CGA Potential risks: Continued downbeat sentiment in the auto dealership segment; potential share priceplunges due to shareholder sell-downs in June 2016 when the ban on trading restrictions is lifted; anddisappointing tax policies on the trading of used cars. Earnings forecast, valuation and rating: We estimate CGAˇs 2015E/16E/17E EPS at Rmb0.34/0.52/0.68. Its current price of Rmb12.05 implies three-year PEs of 36x/23x/18x. The Company may continueto seek inorganic growth to boost earnings and is now tapping into new areas including financial leasingand used car trading. We expect the Companyˇs profit to grow at a CAGR of 28% in 2015-2020, providedthat the acquisition of Baoxin Auto proceeds smoothly. Assuming PEG=1, a 28x 2016E PE appears fairfor the Company, in our view. We initiate our coverage with an OVERWEIGHT call and a target price ofRmb14.
发布日期：2016-03-23 13:26:49
内容： Company overview: China’s No. 1 auto dealer is on its way tobecoming the world’s largest auto dealership group. CGA has an excellent DNA in M&As Auto financial leasing could be accretive to the Company over themedium-to-longer term. The market for used cars is bound to flourish and may serve as asecular growth driver for CGA Potential risks: Continued downbeat sentiment in the auto dealership segment; potential share priceplunges due to shareholder sell-downs in June 2016 when the ban on trading restrictions is lifted; anddisappointing tax policies on the trading of used cars. Earnings forecast, valuation and rating: We estimate CGAˇs 2015E/16E/17E EPS at Rmb0.34/0.52/0.68. Its current price of Rmb12.05 implies three-year PEs of 36x/23x/18x. The Company may continueto seek inorganic growth to boost earnings and is now tapping into new areas including financial leasingand used car trading. We expect the Companyˇs profit to grow at a CAGR of 28% in 2015-2020, providedthat the acquisition of Baoxin Auto proceeds smoothly. Assuming PEG=1, a 28x 2016E PE appears fairfor the Company, in our view. We initiate our coverage with an OVERWEIGHT call and a target price ofRmb14.
