Lisa Cook sues Trump over firing attempt, emergency hearing set
On Wednesday, Citi analysts announced a downgrade of Guangzhou Automobile Group Co Ltd’s stock rating from Buy to Neutral, adjusting the price target from HK$3.26 to HK$3.00. The decision follows a revision of revenue forecasts and gross margin expectations for the Chinese automaker, citing several challenges including softer-than-anticipated year-to-date sales and increased competition.
Guangzhou Automobile Group, which trades under the stock ticker 2238:HK in Hong Kong and OTC:GNZUF in the United States, has experienced a 10% year-over-year decline in total sales volume of passenger vehicles and commercial vehicles, with 488,000 units sold in the first four months of 2025. This downturn has prompted Citi to adjust its 2025 and 2026 revenue forecasts for the company by -4% and 0%, respectively.
The analysts also revised their gross margin forecasts for 2025 and 2026, decreasing them by 1.9 and 1.7 percentage points. This change is partly due to a slower-than-expected recovery in margins for GAC Motor, one of the group’s key business units. Furthermore, net profit forecasts were cut by 29% for 2025 and 3% for 2026, reflecting additional pressures from joint venture earnings. However, these negative impacts are believed to be partially mitigated by cost enhancements resulting from new organizational reforms within the company.
In their analysis, Citi introduced forecasts for 2027 and applied a 0.25x forward price-to-book (PB) ratio to the company’s 2025 book value per share (BPS) to arrive at the new target price of HK$3.00 for Guangzhou Automobile Group’s Hong Kong-listed shares. This valuation is aligned with the average seen during downcycles in the industry.
The report also mentioned the price target for Guangzhou Automobile Group’s A-shares, listed in Shanghai under the ticker 601238 SH, with a maintained Sell rating and a new target price of RMB 7.20, adjusted from RMB 3.00. This target is based on a 0.65x forward PB ratio, which is consistent with the average for A-shares during downcycle periods.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.