Bank of America Cuts BAIC Target Price to HK$1.54, Keeps "Underperform" Rating

Bank of America Securities released a report stating that BAIC Motor reported RMB 43 billion in revenue for Q4 2023, down 11% year-over-year but up 13% quarter-over-quarter. Its gross margin stood at 7.8%, down 0.6 percentage points year-over-year and 2 percentage points quarter-over-quarter. Amid intense market competition, Beijing Benz (in which BAIC holds a 51% stake) saw its sales volume plunge 22% year-over-year, although it rose 9% quarter-over-quarter; net profit declined 27% year-over-year. BAIC recorded a net profit of RMB 71 million for the quarter, primarily due to a one-time gain of RMB 2.2 billion from the sale of its 51% stake in BAIC International in November 2022, compared with a net loss of RMB 2.1 billion in the same period of 2022. Bank of America believes that Beijing Benz’s earnings will be offset by continued losses from BAIC’s self-owned brands, and thus lowered its target price from HK$1.80 to HK$1.54, maintaining an “underperform” rating.