Citigroup: raises target price for Great Wall Motor to HK$17.5, raises EPS forecasts for 2021-2026

Citigroup issued a report, raising its target price for Changan Automobile to HK$17.5 from HK$14.5, maintaining "Buy" rating. The bank also raised its earnings per share (EPS) forecast for the year to 2026 by 9% to 24%. The bank said that Changan Automobile's forecast net profit for the first half was between Rmb650mn and Rmb730mn, up 3.78 times to 4.36 times YoY, indicating net profit for the second quarter was between Rmb327mn and Rmb407mn, beating market expectations, mainly due to the upgrading of domestic products and the improvement of product mix. The bank estimated that the company's net profit per vehicle for the second quarter was between Rmb11,500 and Rmb14,300, compared with Rmb11,700 for the first quarter. The bank also said that Changan Automobile's core profit for the first half was estimated to be between Rmb500mn and Rmb600mn, up 5.67 times to 7.01 times YoY, indicating core profit for the second quarter was between Rmb298mn and Rmb398mn. The bank believes that Changan Automobile's strong export growth is consistent with the view that China's export of internal combustion engine vehicles will increase by 28% YoY this year.