JPmorgan2005汽车行业分析(1)

AsiaPacificEquityResearch05July2005ChinaAutosCracksstarttoappearinautomarketChinaAutomobileManufactureFrankLi(852)[e-mail](AsiaPacific)LimitedSeepage8foranalystcertificationandimportantdisclosures,includinginvestmentbankingrelationships.JPMorgandoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.CustomersofJPMorganintheUnitedStatescanreceiveindependent,third-partyresearchonthecompanyorcompaniescoveredinthisreport,atnocosttothem,wheresuchresearchisavailable.Customerscanaccessthisindependentresearchat:Datastream.ChinasedansalesinFY04andFY05Units050000100000150000200000250000JanFebMarAprMayFY04saleFY05saleSource:CAAM.•Inourreportdated17June,wecautionedthattherecoveryinChina’sautomarketmightnotbesustainable.WerecentlycontactedanumberofdealersinBeijingandShanghai,andfoundthattherecoveryinChina’sautomarketseemstobelosingsteamearlierthanexpected,asreflectedinthefollowing:(1)therenewedpricereductionsatthedealers,withtheincreasedcarproduction.Forinstance,GuangzhouHonda’sFitmodel,whichwashotlysought-afterinAprilandMay,isnowbeingdiscountedbyRmb8,000,or6.7-8%,atthedealers’level,givenrisinginventoryatthedealers’level;(2)adjustingforthefactoroftheweek-longholidayinMay,anumberofdealersreportedadropincarsalesinJune.•Meanwhile,webelieveChina’sautosectorfacesdownwardearningsrevisionrisksfromtheChinesegovernment’spossibledelayinadoptingthepreferentialconsumertaxpolicyforEuro3emissionstandardcars.WeestimatethatDenwayMotorsandBrillianceChinafaceanincreasingriskofafurtherearningsdowngradeof8.3%and6.6%,respectively,intheirFY05EearningsifthegovernmentfailstoadoptitspreferentialconsumertaxpolicyforEuro3emissionstandardcarsinFY05.•WeremainnegativeonChina’sautosectorbecause:(1)therecentrecoveryinChina’sautomarketappearstobelosingsteam;(2)weexpectChina’sautosectortoreportdisappointing1H05resultsintwomonths’time;(3)China’sautosectorfacesdownwardearningsrevisionrisksfromtheChinesegovernment’spossibledelayinadoptingthepreferentialconsumertaxpolicyforEuro3emissioncars.WerecommendreducingpositionsinDenwayMotorsandBrillianceChinaaheadoftheirinterimresultsreleaseinearlySeptember.ValuationofChinaautostocksRatingPriceFY05EP/E(x)FY06EP/E(x)FY05EP/B(x)FY05EDividendyieldDenwayMotorsNeutralHK$2.8010.410.32.42.8%BrillianceChinaUnderweightHK$1.3716.317.50.70.5%Source:Datastream,JPMorganestimates.2AsiaPacificEquityResearch05July2005FrankLi(852)[e-mail]coverymightbeunsustainableAfteradisappointingperformanceinJanuaryandFebruary,China’sautomarketenjoyedadecentrecoveryinMarch,withimprovingsalesvolumeandrelativelystablesalespriceatthedealers’level.AsshownintheFigure1,accordingtoChinaAssociationofAutoManufacturers(CAAM),whichreportscarsalesbyautoproducerstodealers,thesaleofdomesticallymadesedansedgedup1.2%Y/Yto970,463inthefirstfivemonthsthisyear.Figure1:ChinaSedans—MonthlysalesinFY04andFY05Unit050000100000150000200000250000JanFebMarAprMay20042005Source:CAAM.Meanwhile,accordingtoChinaPassengerCarAssociation,whichcompilesretailcarsalesdataforindustryreference,carsalesinthefirstfivemonthsthisyearwentup9.5%Y/Yto1.04million.Figure2:ChinaSedans—MonthlysalesinFY04andFY05Unit050,000100,000150,000200,000250,000300,000JanFebMarAprMay20042005Source:ChinaPassengerCarAssociation.3AsiaPacificEquityResearch05July2005FrankLi(852)[e-mail]theworstisoverforChina’sautosectorandthatitissetonapathofsustainablerecovery,wehighlightedinourpieceChinaAutos:Whowillruintheparty?,17June2005thatthecurrentrecoveryinChina’sautomarketmaynotbesustainablebecause:(1)retailpricestabilityintheautomarkethasbeenachievedonthebackofaverylowcapacityutilizationrateof52%;(2)CompaniessuchasBeijingHyundaiandShanghaiGM,whichsignificantlyexpandedtheircapacitybyend-May,arealmostcertaintodramaticallyincreasetheirproductioninthecomingmonthstofurtherstealmarketsharefromthetwoVolkswagenJVsinChina.Thiswilllikelyre-tipthedemandandsupplybalanceinChina’sautomarketandtouchoffanewroundofpricewar.BeijingHyundaishutdownitsplantfornearlyamonthinMaytodoubleitsannualcapacityto300,000perannumasofJune.ShanghaiGMhascompletedbuildinganewplantinthesouthernpartofShanghaiJingqiaoExportProcessingZone,withanannualtwoshiftcapacityof160,000unitstoboostitstotalcapacitytoaround500,000perannumasofJune.(3)Thebottleneckinthesupplyofimportedkeyautocomponentsisbeingalleviated,ifnotresolved.Whiletheproductionandsupplyofanumberofnewlylaunchedmodels,suchasCrown,Corolla,Mazda6andPeugeot307arestillsufferingduetotheinadequatesupplyoftheimportedautocomponents,accordingtoindustrysourcestheproblemisno