22 Feb 2018 HSI : 30,966. Dongfeng Motor* HOLD 4.7 3,612. Geely Auto HOLD ,203

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1 China / Hong Kong Industry Focus Refer to important disclosures at the end of this report DBS Group Research. Equity Auto OEMs: Rotational play Market volatility offers accumulation opportunity Rotational play into laggards on potential earnings recovery and undemanding valuations; consumption upgrades remain strong for luxury names 217 earnings preview mixed performance expected Our picks: BAIC (1958 HK), BYD (1211 HK) and Brilliance (1114 HK) Accumulation on market volatility. YTD, the auto OEMs share price has been lacklustre, despite some automakers having set 2-3% volume sales growth targets for 218. This is because the market has already anticipated the strong sales target. But laggards such as BAIC and BYD are looking attractive, in anticipation of FY18 earnings recovery and valuation upside. The recent amendments to electric car subsidy has little impact on BYD as the company is moving up the value chain on both travel distance and battery technology. With ongoing consumption upgrade (on rising disposal income level and preference for quality cars), luxury brands' entry models are expected to benefit. We expect Brilliance s new BMW X3 model to ride on the consumption upgrade. Geely is likely to range trade after last year's exceptionally strong performance. HK-listed auto OEM sector is trading at 5-27x FY18 PE, on projected earnings growth of about 3%. Overall, the auto sector is still appealing after recent correction. Saleable new car models needed to sustain buying interest; a three-way fight. We anticipate the Chinese self-brands to face rising competition this year, especially after the expiry of the favourable vehicle purchase tax on small cars. Chinese automakers are rebranding themselves with new auto brands. Great Wall Motor s WEY and Geely s Lynk & Co (Lynk) are two new brands vying for a slice of the mass-market segment, while Guangzhou Auto s Trumpchi is rolling out several new models to rival WEY and Lynk. It is going to be an intense landscape since the foreign auto brands have always been dominating the market. We forecast the Chinese auto market to grow at 3-4% each from , as the overall market has already reached a sizeable scale with annual sales of over 2m units for the past five years. Also, the Chinese government s goal is to raise the electric car penetration rate in the coming years. We forecast the electric vehicle market (volume sales) to grow at ~3% per annum till Feb 218 HSI : 3,966 ANALYST Rachel MIU rachel_miu@dbs.com Recommendation & valuation Company Price Target Price Recom FY18F PE Mkt Cap HK$ HK$ x US$m Auto manufacturers Brilliance China BUY ,149 (1114 HK) Dongfeng Motor* HOLD 4.7 3,612 (489 HK) Geely Auto HOLD ,23 (175 HK) Great Wall Motor* HOLD ,33 (2333 HK) Guangzhou Auto BUY ,261 (2238 HK) BAIC Motor BUY 9.3 2,88 (1958 HK) BYD BUY ,63 (1211 HK) CQ Changan 'B' 8.73 n.a. NR 3.9 1,8 (2625 CH)^@ SAIC Motor 'A' (614 CH)^@ 34.2 n.a. NR 1.3 6,113 Source: Thomson Reuters, DBS Vickers ^ Consensus * TP & Rating under review China automaker index vs volume sales growth Index (1 J an 9 = 1) 1,6 1,4 1,2 1, Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Source: CEIC; Thomson Reuters; DBS Vickers Jan-16 Jan-17 Automaker index (LHS) Total vehicle sales in China (RHS) ' Units 3,5 Jan-18 3, 2,5 2, 1,5 1, 5 ed-th / sa-cs / AH

2 Auto OEMs picky on our stock picks Market volatility; opportunity to accumulate laggards on rotational play. The recent market volatility trading pattern is a good opportunity to accumulate. However, we have a selective approach after a strong share price performance in 217. Some automaker laggards are looking attractive, especially with a turnaround angle in 218 sales performance. These names include BAIC, BYD, and Great Wall Motor, which are expected to post a 3-65% decline in FY17 earnings due to weak volume sales last year. But these negatives have largely been factored into their valuation multiples. We expect their FY18 earnings recovery (on anticipation of volume and margin improvements) to lift trading sentiments. China automakers YTD share price performance 217 volume sales growth vs share price performance % % (6) (16) (26) Geely Auto Guangzhou Auto Brilliance China BYD BAIC Motor Dongfeng Motor Share price change (LHS) Total sales volume change (RHS) Great Wall Motor % 1 5 (5) (1) (15) BAIC Motor Brilliance China BYD Dongfeng Motor Source: Bloomberg Finance L.P Geely Auto Great Wall Motor Guangzhou Auto 3.5 HSI index Source: Companies, Thomson Reuters Chinese automaker rebranding strategy to remain competitive. Nothing beats saleable new brands/models. 218 is expected to remain challenging, because the Chinese auto market has already reached a sizeable scale, coupled with auto vehicle sales restrictions in the major cities. Car buyers are becoming more demanding and automakers are constantly releasing new models to attract buying interest, amidst the rising market competition. In 217, two Chinese automakers rolled out their new brands Great Wall Motor s WEY and Geely s Lynk & Co as part of their rebranding strategy to move up the auto value chain. We plot the sales charts of these two brands to illustrate the buying interest as follows: On the other hand, the 217 outperformers are expected to trade sideways as the market is becoming more demanding and would require a bigger surprise to further drive their share price higher. Based on the chart below, the outperformers in 217 have enjoyed robust volume sales. Therefore, a multi-fold jump in share price could be challenging (since these positives have largely been priced in) compared with the laggards. Page 2

3 WEY vs Lynk & Co monthly sales trend Unit 12, 1, 8, 6, 4, 2, Jun-17 Jul-17 Source: Companies Aug-17 Sep-17 We anticipate market to watch very closely the performance of these two new brands, which is critical on their share price movement. On the other hand, Guangzhou Auto s Trumpchi, Oct-17 Nov-17 Dec-17 Great Wall Motor - WEY VV7 sales Great Wall Motor - WEY VV5 sales Geely - Lynk & Co Jan-18 is rivalling WEY and Lynk with an aggressive new model pipeline. Hence, we believe this market will be a three-way fight between these three Chinese auto brands. In our view, market has remained sideline on Geely because its FY18 PE is relatively higher than its peers, which implies the positives could have been priced into its share price. Valuation and our stock picks Volume sales and rebranding strategy driving auto sector index performance. The automakers performance in 217 was largely driven by strong volume sales growth of the Chinese brands and high expectations built into the potential benefits from certain Chinese automakers rebranding strategy. In our opinion, the rebranding strategy is slowly taking shape and it may probably need another 3-6 months to assess the new brands sales impact on earnings. However, automakers have generally set realistic sales targets for 218, which should support earnings growth. On this basis, we believe the automaker segment will continue to draw investment interest. China automaker index vs volume sales growth Index (1 Jan 9 = 1) 1,6 1,4 1,2 1, ' Units 3,5 3, 2,5 2, 1,5 1, 5 Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Automaker index (LHS) Total vehicle sales in China (RHS) Source: CEIC; Thomson Reuters; DBS Vickers Southbound trading momentum. As the following chart shows, Chinese investors have generally favoured the automakers. The southbound trades on automakers have been trending up after its short blip in early 4Q17. The positive momentum could support the sector s performance. As a percentage, southbound shareholding has risen from about 9.7% in March 217 to approximately 13% on 22 February 218. Among the automakers, Brilliance, Great Wall Motor and Sinotruk are the investors favourites. Page 3

4 Southbound shareholding of automakers Auto OEM Auto OEM mn 3, 13% 2,9 2,8 2,7 12% 11% 2,6 2,5 1% 2,4 2,3 9% 2,2 17-Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb-18 8% 17-Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb-18 Brilliance (1114 HK) Great Wall Motor mn mn 1,4 1,2 1, Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb-18 Source: HKEx Page 4

5 Our picks. Among the automakers, our favourites are BAIC, BYD and Brilliance (please see stock summary on our views). These stocks fit into our earnings recovery, electric car development and consumption upgrade criteria. Besides, these stocks are expected to post approximately 3% FY18 earnings growth and they are trading at undemanding valuation multiples. The table below summarises the key points on these three stocks. Top picks Company Rating TP HK$ FY18 PE Key Points BAIC (1958 HK) BUY x Turnaround of its BJ-Hyundai JV and earnings recovery insight. Several new car models planned for 218 launch should boost volume sales. Mercedes Benz JV is expected to remain buoyant, riding on the upgrading cycle in major cities. The JV posted >6% increase in FY17. Riding on parent's EV strategy, after the latter injected the EV business into an A- share listed company, Qianfeng (6733 CH). Expect earnings recovery; FY17-19F earnings CAGR of 3%. BYD (1211 HK) BUY x Highest exposure to the EV market, with EVs accounting for 25-3% of total vehicle sales. Income from sales of excess carbon credits following the new EV policy implementation starting from 219. Expanding its electrification business into E-trucks and mono-rail manufacturing. Expect earnings recovery; FY17-19F earnings CAGR of 3%. Brilliance (1114 HK) BUY x BMW JV expected to benefit from the consumption upgrade trend. The new BMW X3 model is ready to ride on the rising demand for luxury entry models. Localisation strategy could accelerate in the future. BMW 4 series and BMW X5 are potential models to be produced locally in the future. Restructuring of its Jinbei brand through a tie-up with Renault should enhance its LCV business. Earnings momentum expected to accelerate, coming from BMW JV and turnaround of Jinbei; estimates FY17-19 earnings CAGR of 32%. Source: Companies, DBS Vickers Page 5

6 Industry fundamentals - expect a major shake-up in EV segment and consumption upgrade still prevails Electric mobility strategy. Many OEMs have lined up a very robust electric car model pipeline for 218/19 launch, in preparation for the EV quota and credit system introduction. The Chinese government has approved over 8 electric vehicle models recently, of which the majority are electric commercial vehicles. Key electric car models approved by government unit King Long Motor BYD Dongfeng Shanghai Shenlong Jiangliang BAIC-Foton CRRC Zhongtong GAC-Trumpchi SGM-Wuling BAIC-Beijing GAC-Mitsubishi Beijing Hyundai Great Wall Auto Geely Auto JAC GAC-Toyota SAIC-Roewe SAIC-Maxus Chery Source: MIIT PV models CV models EV penetration still low for individual auto entity. Based on 217 EV sales by individual automaker, majority of them still have very low EV penetration. But by aggregating the EV sales of parent groups, these automakers would have better penetration rates. EV penetration of major automakers Units (') BAIC Group BYD Geely SAIC Changan Zotye Chery Jianghuai Dongfeng GAC GWM Hawtai Fujian FAW Source: D1EV NEV (LHS) Conventional (RHS) Geely included EV sales of its parent, Zhidou and Kandi Units (') 7, 6, 5, 4, 3, 2, 1, Top EV cities. Beijing, Shanghai and Shenzhen are the top three cities with the highest EV sales last year. Beijing tops the battery electric vehicle segment (BAIC is the leader) while Shenzhen has a more balanced mix between battery electric vehicles and plug-in hybrid (BYD s key market). We believe this is also partly attributable to the local governments' strong support in the previous years to drive the electric vehicle market development. Hence, China has two strong EV players currently Beijing EV Co (subsidiary of BAIC Group) and BYD. Following the change in EV subsidy scheme, the strong players will continue to dominate the market, as they have achieved a relatively large scale and technology wise, are moving ahead of peers. Page 6

7 Top ten cities with highest electric vehicle sales (217) Units (') Beijing Source: CPCA Shanghai Shenzhen Consumption upgrade still strong, benefitting luxury entry models. We remain positive on this trend. The growing middle class is boosting high-end car consumption in China. For instance, the percentage of households with annual income of >Rmb5, in the urban areas has grown from 16% in 21 to 61% in 216. By end-217, the disposable income per capita in the urban area was approximately Rmb36,4, compared to Rmb6,3 in year 2. At the same time, sales of high-end and premium cars have been growing in tandem with the consumption power. China urban disposal income vs premium car sales RMB 38, 36, 34, 32, 3, 28, 26, 24, 22, 2, BEV Source: CEIC, DBS Vickers Tainjin Hangzhou Hefei Guangzhou PHEV Chongqing Qingdao Changsha ' units 2,6 2,4 2,2 2, 1,8 1,6 1,4 1,2 1, China urban disposable income (LHS) China premium car sales (RHS) Apart from the rising disposal income levels in China, luxury car penetration rate is still low in the mainland, despite a growing middle class. We estimate the penetration rate to reach 11.4% by 22, up from 9.7% in 217, on continual upgrading activities and automakers proactive new product strategy to boost volume sales. Major cities are important car replacement markets for the luxury auto brands, given the limited supply of car licences. Hence, we forecast the Chinese luxury car sales to hit 3.1m units in 22, posting a sales CAGR of 9% from 217, well above the overall vehicle market's 3-4% per annum. China luxury car sales projections m units % Source: DBS Vickers Luxury car sales (LHS) 217 Brand mix musical chair to start soon. Although the Chinese auto brands have garnered market shares in recent years (technology improvement and declines in Korean auto sales due to political reasons), we anticipate the foreign brands to make a bigger push in the coming years via a more aggressive new model pipeline and active promotional activities, following the expiry of the small vehicle purchase tax benefit this year. This rebalancing act means future car buyers may be attracted back to the foreign JV brands again. We anticipate the Korean automakers to make a sterling recovery this year, since they have lined up many new models to regain lost market share. SUV the only growth segment, but rate of expansion is slowing. The SUV market recorded its slowest growth of 13.3% in 217, compared to 4-5% annual expansion from At end-december 217, SUV accounted for about 41% of the total passenger vehicle market. Given the high-base effect, we estimate the SUV market to grow at low teens this year, relatively similar with F 219F 22F Y-o-Y growth (RHS) Page 7

8 China SUV annual sales ' units 12, 1, 8, 6, 4, 2, 12% 1% 8% 6% 4% 2% % 2,4 2,5 2,6 2,7 2,8 2,9 2,1 2,11 2,12 2,13 2,14 2,15 2,16 2,17 SUV YoY Source: CAAM Hence, low-single digit volume sales growth in the mid-term. Vehicle sales are expected to shift from the coastal areas to the central and western regions. We forecast total vehicle sales growth to range 3-4% per year from , factoring in higher vehicle purchase tax rate at 1% on small cars (1.6L engines and below). This could have some bearing on the price-elastic small-car buyers. Total passenger vehicle unit sales grew by only 1.4% to 24.7m units, as small car buyers had front-loaded in 4Q16 ahead of the higher vehicle purchase tax in 217 (1.6L-and-below engine cars raised from 5% to 7.5%). China vehicle market sales projections m units YoY, % F 219F 22F CV sales (LHS) PV sales (LHS) Total sales growth (RHS) Source: CEIC; DBS Vickers Page 8

9 Mixed impact from new auto policies Vehicle purchase tax back to normal rate except for electric vehicles. Starting 1 January 218, the vehicle purchase tax for 1.6L-and-below small-engine cars will be back at 1%, up from 7.5% previously. The higher vehicle purchase tax does have some bearing on the price-elastic small-car buyers. Assuming a Rmb1, price tag for a 1.6L car, the buyer would have to pay an extra Rmb2,137. The small-car segment accounts for about 7% of the total PV market. Gradual cuts in tariffs on imported vehicles. The government plans to lower the tariff on imported cars from current 25% to 15% over several stages. This is positive on the high-end car market (with price tags over Rmb1m per car). Imported vehicles rose approximately 15% last year to about 1.2m units. The lower tariffs should lift the affordability of these expensive cars, benefitting the car importers and auto dealerships. Passenger vehicle engine size split ' units 3, 25, 2, 15, 1, 5, <1.6L 1.6L-2L 2L-2.5L 2.5L-3L >3L Source: CAAM However, the government has kept the favourable tax policy on electric vehicles. Car buyers will still enjoy vehicle purchase tax waiver of 1% on their electric cars from 1 January 218 to 31 December 22. EV subsidy reform promotes technology upgrades. The electric car subsidy scheme was revised recently, aiming to encourage electric carmakers to move up the value chain. The government has tightened the amount of subsidy on low-end EVs and will award a bigger amount to the high-end players (for longer travel distance and higher-density battery technology). In this aspect, we anticipate the strong players to benefit, such as Beijing Electric Vehicle Co (subsidiary of BAIC Group) and BYD. More liberal vehicle financing terms help to drive volume sales. The government has set the maximum borrowing limit at 8% for gasoline cars and 85% for new energy vehicles, starting 1 January 218. In 217, approximately 1.6m vehicles sold were under finance loans and we estimate this to reach about 14m units by 22. We believe a more liberal financing environment is positive to the high-end and luxury car market. It should boost sales of Audi, BMW and Mercedes-Benz, three of the key luxury brands in China. Page 9

10 FY17 earnings preview Mixed results expected of FY17 earnings. Brilliance, Geely and Guangzhou are expected to have posted 4-1% earnings growth last year. On the other hand, BYD, BAIC and Great Wall Motor are expected to report earnings contraction of 15-65%. The key reasons for the vast earnings disparity are: 1) volume sales; 2) vehicle margins; and 3) operating expense controls. Rising competition, political tension and government policy had resulted in a challenging year for these three automakers. Earnings preview Net earnings (Rmb m) Y-o-Y Company FY16 FY17E growth Reasons BAIC Motor (1958 HK) 6,367 2,228-65% Weak Korean JV and keen competition in the auto self-brand segment, offset with strong contribution from Beijing-Benz JV BYD (1211 HK) 5,52 4,377-13% Dragged down by weak NEV performance in 1H17. Gradual recovery of NEV business and steady contribution from handset component & assembly business are expected. Brilliance China (1114 HK) 3,682 5,94 38% Strong contribution from BMW JV. A potential swing factor is additional provision from its Jinbei business Dongfeng Motor 13,355 13,89 4% Weak performance of Dongfeng-PSA (489 HK) Geely Auto (175 5,11 1,22 1% Due to 63% increase in volume sales, helped by new models sales HK) Guangzhou Auto (2238 HK) 6,14 1, % Core profits growth largely due to strong performance of its JVs and Trumpchi brand Great Wall Motor (2333 HK) 1,551 5,35-52% Profit margin compression from ASP cuts and higher promotional expense due to rising market competition; increase in R&D cost for its WEY brand Source: Companies; DBS Vickers Page 1

11 Stock summary BAIC (1958 HK; BUY; TP HK$13.2) - turnaround play. The Hyundai JV monthly vehicle sales are improving, possibly leading to earnings recovery in 218. The JV suffered its worst performance in 217, but volume sales have started to trend up in recent months. During its glory years, the JV contributed between Rmb4bn and Rmb6bn from Due to the political tension between the two countries, the Korean JV is expected to suffer a net loss of KR9m in FY17. We project a turnaround of the JV in 218. The Korean JV company has lined up Encino, Sonata 9, ix35 and Elantra PHEV new models for 218. It featured its ix35 SUV model in the recent Guangzhou auto show. The pricing of ix35 is also very competitive, at around Rmb12-162k. After suffering a major market loss in 217, BJ-Hyundai aims to regain some lost ground. Through its investments in parent s Beijing Electric Vehicle Co, BAIC is riding on its parent s strength in the EV space. BAIC Group achieved approximately 13, units of new energy vehicle sales in 217, making it the top EV player in China. BYD (1211 HK: BUY; TP HK$92) key beneficiary from EV development. We like BYD because it has a very high exposure to the electric car market, accounting for 25-3% of total vehicle sales. This means BYD could benefit from the extra carbon credits it generates, when the EV quota and carbon credit scheme is launched in 219. The company has planned to launch four new models, including e5 45, Qin EV 45, Song EV 4 and Yuan EV 36 this year. Besides, the latest amendments to the subsidy scheme has limited negative impact on BYD because the company is moving up the value chain (both in travel distance and battery density). Given its large production scale, we anticipate the company has achieve a stable production cost structure. Hence, its margin is expected to see improvements. Besides, BYD is expanding its electrification strategy into E-trucks and mon-rail manufacturing, hence broadening its earnings stream. We estimate BYD to generate earnings CAGR of 3% from FY It current valuation is not expensive given its high EV exposure. Our TP of HK$92 is pegged to 35x on FY18 earnings. Brilliance (1114 HK; BUY; TP HK$25.6) - riding on consumption upgrade and new JV to boost LCV business. The BMW JV remains a strong player in the luxury car market. 218 is expected to see accelerated earnings growth, with full-year contribution from the new BMW 5 series as well as the anticipated BMW X3 launch. Although there would be some initial development costs on the new BMW X3 model, it creates a new revenue and profit stream. Also, with the rising volume sales, BMW Auto Finance Company will become a big beneficiary of dealer finance as well as retail finance. The target ROE for this business is >18%. Separately, Brilliance has also formalised the JV contract with Renault under which Renault Brilliance Jinbei Automotive Company (Renault Brilliance) will undertake the production and sales of Jinbei, Renault and Huasong brands of light commercial vehicles (LCV) in Dadong, Shenyang. Its goal is to first invigorate the Jinbei brand and then to manufacture the Renault LCV by 22. The target is to achieve sales of 15, units annually by 222 and accelerate electrification of powertrain to meet the new EV policy. With Renault taking a 49% stake in Renault Brilliance, this will recapitalise the JV with Rmb1.5bn. This series of action should help to reduce the operating losses, which had jacked up from Rmb32m in FY14 to Rmb7m in 1H17. Dongfeng Motor (489 HK; HOLD; TP HK$11.) - too many JVs, auto conglomerate discount prevails. Dongfeng s valuation lagged the market in 217, and is trading at a big discount to peers. Its numerous JVs and lack of focus are some of the concerns which the market has factored into its share price. Besides, the JV with Peugeot Citroen (DF-PSA) has been suffering in the past three years, with volume sales further plunging ~4% in 217. Apart from the Japanese JVs, lack of SUV models and uncompetitive model portfolio at the European JV are reasons for the weak sales performance. Although DF-PSA sales pressure is showing some stabilisation in recent months, we do not expect this to be a strong catalyst for 218 re-rating yet. Geely Auto (175 HK; HOLD; HK$24.) - too early to assess Lynk s sales. Geely's share price rallied the most in 217, and a lot of positives have been built into its valuation. Other than the Lynk & Co's new brand strategy which could be a share price driver, the market is also looking at potential asset injections from parent. Parent, Zhejiang Geely's acquisitions of Proton/Lotus (Malaysia), Terrafugia (flying car company based in the US) and a stake in Saxo Bank (Denmark) have driven up Geely's share price. Although the company has released its 218 sales target of 1.58m units (including Lynk brand and representing y-o-y expansion of 27%), its share price has underperformed the market YTD. We believe the market is anticipating bigger surprises to further push the share price higher. Besides, based on the first two months sales of the Lynk brand, it appears that short-term production bottlenecks could be a drag on sales. Hence, we anticipate Geely to trade sideways in the near term. Based on the latest sales target, we raised our FY18/19 earnings by around 23% each, and lifted our TP to HK$24. based on 15x FY18 earnings (same as previous valuation multiple). Geely is one of the more expensive Chinese automakers compared to peers. Page 11

12 Great Wall Motor (2333 HK; HOLD; TP HK$11.1 under review) WEY brand may help, but cannot rule out cannibalisation. Broad market sell down and profit warning have been weighing on Great Wall Motor (GWM) share price recently. Although we expect its earnings to recover this year, we will review our HOLD recommendation and TP after the company releases its 217 results. GWM s SUV business has suffered in recent years, as market competition intensifies, while it lacks a strong product pipeline to compete with rivals. The launch of the second brand in 217 WEY, is supposed to broaden its customer reach (ASP between Rmb15-19K). Since its launch in June 217, the WEY brand has achieved decent volume sales of approximately 16,7 units, but its flagship H6 SUV sales were slow, which could be due to cannibalisation between H6 and WEY (VV 5 and VV 7 models). The company is negotiating with BMW AG on a potential JV to manufacture the MINI locally. If successful, this could be a turning point for GWM. The MINI brand accounts for about 15% of BMW AG s automobile division. Guangzhou Auto (2238 HK; BUY; TP HK$25) - acceleration of electrification strategy. Guangzhou Auto (GAC) is investing approximately Rmb4.7bn into an EV factory in Guangzhou, which will have an initial production capacity of 2, units per annum. The factory is expected to be ready by 219. At present, GAC has rolled out several NEV models under the Trumpchi brand to prepare for the 219 new EV policy implementation. GA3S PHEV, GS4 PHEV and GE3 (BEV), are some of the electric car models aimed to attract the car buyers under the current step-down subsidy environment. GAC is also expanding its Trumpchi fossil fuel vehicle production capacity from 25, to 45, units annually by 219. By 22, GAC will have a much broader product pipeline covering AO/A/B/C/NEV vehicle segments. By then the company should meet the national fuel standard of 5L/1km. Trumpchi has also been in the forefront of the SUV market. It has three new models this year, two SUV (GS7 and GS3), and a MPV GM8. Separately, its foreign Japanese JV partners Toyota and Honda are also rolling out new strategies to strengthen their China business. Toyota is planning to increase the number of EV models for the Chinese market. The board has also approved the restructuring of Honda (China), which will eventually be wholly owned by GAC-Honda under the Rmb1.2bn plan. The plan also includes upgrading Honda's (China) factory to form part of the Honda manufacturing network. GAC-Mitsubishi will invest around Rmb53m to build the second factory with an annual capacity of 1, units. All these business expansion strategies are expected to strengthen the earnings outlook of its various Japanese JVs. Page 12

13 Peers comparison table Mkt PE PE Yield Yield P/Bk P/Bk EV /EBITDA ROE ROE Currency Price Cap Fiscal 17F 18F 17F 18F 17F 18F 17F 18F 17F 18F Company Name Code Local$ US$m Yr x x % % x x x x % % Hong Kong GZ Auto 'H'* 2238 HK HKD ,261 Dec Sinotruk (Hong Kong) 388 HK HKD ,345 Dec Dongfeng Motor 'H'* 489 HK HKD ,612 Dec Brilliance China* 1114 HK HKD ,149 Dec Great Wall Motor 'H'* 2333 HK HKD ,33 Dec BYD 'H'* 1211 HK HKD 73 25,63 Dec Geely Automobile* 175 HK HKD ,23 Dec BAIC Motor 'H'* 1958 HK HKD ,88 Dec Average 11.3~ 9~ 2.4~ 3~ 2~ 1.7~ 7.2~ 5.6~ China SAIC Motor 'A' 614 CH CNY ,113 Dec Faw Car 'A' 8 CH CNY ,577 Dec CQ Changan 'A' 625 CH CNY ,14 Dec CQ Changan 'B' 2625 CH HKD ,8 Dec Beiqi Foton Motor 'A' 6166 CH CNY ,572 Dec Anhui J ianghuai 'A' 6418 CH CNY ,228 Dec Zhengzhou Yutong 'A' 666 CH CNY 24 8,36 Dec Great Wall Motor 'A'* CH CNY ,33 Dec GZ Auto. 'A'* CH CNY ,261 Dec BYD 'A'* 2594 CH CNY ,63 Dec Average 2.5~ 15.5~ 2.7~ 3.1~ 1.9~ 1.7~ 8.4~ 7.1~ 13.5~ 13.8~ # FY17: FY18; FY18: FY19 ~ Exclude outliners Source: Thomson Reuters, *DBS Vickers Page 13

14 Peers comparison table (continued) Mkt PE PE Yield Yield P/Bk P/Bk EV /EBITDA ROE ROE Currency Price Cap Fiscal 17F 18F 17F 18F 17F 18F 17F 18F 17F 18F Company Name Code Local$ US$m Yr x x % % x x x x % % US Ford Motor F US USD ,366 Dec General Motors GM US USD ,891 Dec (9.8) 2.8 Tesla TSLA US USD ,283 Dec n.a. n.a (23.1) 5.7 Average (3.1) 13.9 Korea Kia Motors 27 KS KRW 33,65 12,542 Dec Hyundai Motor 538 KS KRW 157, 31,797 Dec Average Japan Toyota Motor# 723 JP JPY ,661 Mar Honda Motor# 7267 J P J PY ,244 Mar Nissan Motor# 721 J P J PY ,682 Mar Suzuki Motor# 7269 J P J PY ,877 Mar Mitsubishi Motors# 7211 J P J PY 81 1,721 Mar Average Europe BMW BMW GR EUR ,43 Dec Volkswagen (Swx) VOW GR CHF ,222 Dec Saab 'B' SAABB SS SEK ,12 Dec Peugeot UG FP EUR ,811 Dec Porsche PAH3 GR EUR ,22 Dec n.a. n.a Daimler DAI GR EUR ,82 Dec Fiat Chrysler Auto FCA IM EUR ,59 Dec Renault RNO FP EUR ,13 Dec Ferrari (Mil) RACE IM EUR ,128 Dec Volvo 'B' VOLVB SS SEK ,844 Dec Average # FY17: FY18; FY18: FY19 ~ Exclude outliners Source: Thomson Reuters, *DBS Vickers Page 14

15 Appendix New electric car models Geely (Emgrand EV45) Beijing Electric Vehicle Co (EX36 SUV) BYD e5 45 BYD Qin EV45 BYD Song EV4 BYD Yuan EV36 Source: Company Page 15

16 BAIC Motor Corp (1958 HK Equity, HK$1.72, BUY, Target Price 12-mth HK$ 13.2) Forecast & Valuation General Data FY Dec (RMB m) 216A 217F 218F 219F At A Glance Turnover 116, ,14 163, ,668 Issued Capital - H shares (m shs) 2,11 EBITDA 16,457 17,659 19,472 23,669 - Non H shrs (m shs) 5,495 Pre-tax Profit 15,269 16,528 19,982 24,818 H shs as a % of Total 28 Net Profit 6,367 4,859 7,173 8,87 Net Pft (Pre Ex) (core profit) 6,367 4,859 7,173 8,87 Total Mkt. Cap (HK$m/US$m) 81,422 / 1,45 Net Profit Gth (Pre-ex) (%) 91.9 (23.7) Major Shareholders EPS (RMB) Beijing Automotive Group (%) 45. EPS (HK$) Beijing Shougang (%) 13.5 EPS Gth (%) 91.8 (23.7) Major H Shareholders (%) Diluted EPS (HK$) Daimler AG (%) 38.2 DPS (HK$) Easy Smart Limited (%) 6. BV Per Share (HK$) PE (X) H Shares-Free Float (%) 57.4 P/Cash Flow (X) m Avg. Daily Val. (US$m) 29.6 P/Free CF (X) EV/EBITDA (X) Net Div Yield (%) P/Book Value (X) Net Debt/Equity (X) CASH CASH CASH CASH ROAE (%) Earnings Rev (%): Nil Nil Nil Consensus EPS (RMB) Other Broker Recs: B: 18 S: 1 H: 9 Income Statement (RMB m) Balance Sheet (RMB m) FY Dec 216A 217F 218F 219F FY Dec 216A 217F 218F 219F Turnover 116, ,14 163, ,668 Net Fixed Assets 4,71 43,854 46,959 49,387 Cost of Goods Sold (89,967) (13,541) (121,831) (134,5) Invts in Assocs & JVs 17,914 16,173 19,87 22,82 Gross Profit 26,232 35,563 41,297 48,663 Other LT Assets 25,942 26,594 27,124 27,519 Other Opg (Exp)/Inc (14,711) (17,94) (21,825) (24,994) Cash & ST Invts 36,64 49,28 59,231 74,516 Operating Profit 11,52 17,659 19,472 23,669 Inventory 14,167 15,584 17,142 18,856 Other Non Opg (Exp)/Inc Debtors 27,189 29,98 32,899 36,188 Associates & JV Inc 4,217 (517) 1,16 1,647 Other Current Assets 7,553 8,382 9,364 1,535 Net Interest (Exp)/Inc (468) (614) (596) (498) Total Assets 168,9 189, , ,821 Dividend Income Exceptional Gain/(Loss) ST Debt 27,57 27,57 27,57 27,57 Pre-tax Profit 15,269 16,528 19,982 24,818 Other Current Liab 7,591 79,696 88,473 98,443 Tax (3,733) (5,966) (7,173) (8,85) LT Debt 7,89 8,89 9,89 1,89 Minority Interest (5,169) (5,74) (5,636) (7,26) Other LT Liabilities 4,897 5,14 5,331 5,582 Preference Dividend Shareholder s Equity 4,16 45,19 52,192 6,999 Net Profit 6,367 4,859 7,173 8,87 Minority Interests 17,873 23,577 29,213 36,419 Net profit before Except. 6,367 4,859 7,173 8,87 Total Cap. & Liab. 168,9 189, , ,821 EBITDA 16,457 17,659 19,472 23,669 Sales Gth (%) Non-Cash Wkg. Cap (21,682) (25,822) (29,68) (32,863) EBITDA Gth (%) Net Cash/(Debt) ,91 21,852 36,138 Opg Profit Gth (%) Effective Tax Rate (%) Cash Flow Statement (RMB m) Segmental Breakdown (RMB m) / Key Assumptions FY Dec 216A 217F 218F 219F FY Dec 216A 217F 218F 219F Pre-Tax Profit 15,269 16,528 19,982 24,818 Revenues (RMB m) Dep. & Amort. 4,937 5,566 6,365 7,177 Beijing Motor 3,887 16,84 16,98 17,96 Tax Paid (4,677) (3,733) (5,966) (7,173) Beijing Benz 85, ,2 146, ,78 Assoc. & JV Inc/(loss) (4,217) 517 (1,16) (1,647) Total 116, ,14 163, ,668 (Pft)/ Loss on disposal of FAs Segment Gross Profit (RMB m) Chg in Wkg.Cap. 5,23 2,115 2,266 2,413 Beijing Motor 857 (2,573) (2,547) 898 Other Operating CF 31 Beijing Benz 25,375 38,136 43,844 47,765 Net Operating CF 16,646 2,992 21,541 25,589 Total 26,232 35,563 41,297 48,663 Capital Exp.(net) (9,759) (1,) (1,) (1,) Segment Gross Profit Margins Other Invts.(net) 8 Beijing Motor 2.8 (16.) (15.) 5. Invts in Assoc. & JV (2,427) (2,6) (2,6) (2,6) Beijing Benz Div from Assoc & JV Total Other Investing CF 3,553 3,283 (53) 756 Key Assumptions Net Investing CF (8,626) (8,776) (12,59) (11,33) Beijing-Benz sales (' units) Div Paid (1,775) Beijing - Hyundai sales (' 1, Chg in Gross Debt 5,39 1, 1, 1, units) Capital Issues Self brand (' units) Other Financing CF 743 Net Financing CF 4,7 1, 1, 1, Currency Adjustments 9 Chg in Cash 12,117 13,216 9,951 15,285 Source: Company, DBS Vickers Page 16

17 Brilliance China (1114 HK EQUITY, HK$2.3, BUY, Target Price 12-mth HK$ 25.6) Forecast & Valuation General Data Industry Focus FY Dec (RMB m) 216A 217F 218F 219F At A Glance Turnover 5,125 5,371 5,935 6,757 Issued Capital (m shrs) 5,45 EBITDA 3,774 4,865 7,436 8,892 Mkt. Cap (HK$m/US$m) 12,419 / 13,88 Pre-tax Profit 3,425 4,659 7,211 8,661 Net Profit 3,682 5,138 7,447 8,935 Major Shareholders Net Pft (Pre Ex) (core profit) 3,682 5,138 7,447 8,935 Huachen Auto (%) 42.5 Net Profit Gth (Pre-ex) (%) EPS (RMB) JPMorgan Chase & Co. (%) 8. EPS (HK$) Templeton Asset Management (%) 6.9 EPS Gth (%) Free Float (%) 42.7 Diluted EPS (HK$) m Avg. Daily Val. (US$m) 45.7 DPS (HK$) BV Per Share (HK$) PE (X) P/Cash Flow (X) nm nm nm nm P/Free CF (X) nm nm nm nm EV/EBITDA (X) Net Div Yield (%) P/Book Value (X) Net Debt/Equity (X) ROAE (%) Earnings Rev (%): Nil Nil Nil Consensus EPS (RMB) Other Broker Recs: B: 32 S: 2 H: 1 Income Statement (RMB m) Balance Sheet (RMB m) FY Dec 216A 217F 218F 219F FY Dec 216A 217F 218F 219F Turnover 5,125 5,371 5,935 6,757 Net Fixed Assets 2,25 2,624 2,993 3,357 Cost of Goods Sold (4,954) (5,14) (5,638) (6,419) Invts in Assocs & JVs 19,348 24,138 3,51 38,128 Gross Profit Other LT Assets 2,436 2,379 2,321 2,263 Other Opg (Exp)/Inc (913) (1,68) (947) (1,88) Cash & ST Invts 1, ,536 Operating Profit (741) (1,377) (651) (75) Inventory 1,14 1,159 1,217 1,278 Other Non Opg (Exp)/Inc Debtors 1,584 1,65 1,722 1,8 Associates & JV Inc 4,246 6,126 7,955 9,496 Other Current Assets 3,187 3,258 3,332 3,48 Net Interest (Exp)/Inc (8) (9) (94) (85) Total Assets 31,43 35,764 43,4 51,77 Dividend Income Exceptional Gain/(Loss) ST Debt 3,655 3,68 3,563 3,518 Pre-tax Profit 3,425 4,659 7,211 8,661 Other Current Liab 4,668 4,814 4,964 5,119 Tax (36) (38) (4) (42) LT Debt Minority Interest Other LT Liabilities Preference Dividend Shareholder s Equity 23,724 28,861 36,39 45,244 Net Profit 3,682 5,138 7,447 8,935 Minority Interests (1,125) (1,641) (1,917) (2,233) Net profit before Except. 3,682 5,138 7,447 8,935 Total Cap. & Liab. 31,43 35,764 43,4 51,77 EBITDA 3,774 4,865 7,436 8,892 Sales Gth (%) Non-Cash Wkg. Cap 1,28 1,254 1,37 1,368 EBITDA Gth (%) Net Cash/(Debt) (2,521) (3,53) (2,618) (1,982) Opg Profit Gth (%) (52.7) 15.3 Effective Tax Rate (%) Cash Flow Statement (RMB m) Segmental Breakdown (RMB m) / Key Assumptions FY Dec 216A 217F 218F 219F FY Dec 216A 217F 218F 219F Pre-Tax Profit 3,425 4,659 7,211 8,661 Total pretax profit (RMB m) Dep. & Amort BMW 3,998 5,895 7,717 9,246 Tax Paid (33) (18) (19) (2) Non-BMW (574) (1,235) (56) (585) Assoc. & JV Inc/(loss) (4,246) (6,126) (7,955) (9,496) Total 3,425 4,659 7,211 8,661 (Pft)/ Loss on disposal of FAs Key Assumptions Chg in Wkg.Cap. (413) (113) (119) (127) Sales volume (') N/A N/A N/A N/A Other Operating CF Minibuses - Jinbei Net Operating CF (932) (1,335) (6) (693) BMW Capital Exp.(net) (48) (49) (5) (51) BMW net margin (%) Other Invts.(net) Invts in Assoc. & JV Div from Assoc & JV 1,13 1,336 1,583 1,878 Other Investing CF Net Investing CF 1, ,131 1,426 Div Paid (475) Chg in Gross Debt 17 Capital Issues Other Financing CF (6) (14) (141) (142) Net Financing CF (312) (14) (141) (142) Currency Adjustments Chg in Cash (13) (578) Source: Company, DBS Vickers Page 17

18 BYD Company (1211 HK EQUITY, HK$73., BUY, Target Price 12-mth HK$ 92.) BYD Company (2594 CH Equity, RMB62.32, HOLD, Target Price 12-mth RMB 74.) (under review) Forecast & Valuation General Data FY Dec (RMB m) 216A 217F 218F 219F At A Glance Turnover 1,28 16, ,45 13,338 Issued Capital - H shares (m shs) 915 EBITDA 15,843 17,265 19,53 21,97 - Non H shrs (m shs) 1,813 Pre-tax Profit 6,568 7,143 8,475 1,233 H shs as a % of Total 34 Net Profit 4,836 4,629 6,13 7,416 Net Pft (Pre Ex) (core profit) 4,836 4,629 6,13 7,416 Total Mkt. Cap (HK$m/US$m) 22,746 / 25,99 Net Profit Gth (Pre-ex) (%) 73.8 (4.3) Major Shareholders EPS (RMB) Wang Chuan-fu (%) 2.7 EPS (HK$) LV Xiang Yang (%) 16.2 EPS Gth (%) 57.7 (4.3) Major H Shareholders (%) Diluted EPS (HK$) Berkshire Hathaway Inc. (%) 24.6 DPS (HK$) Himalaya Capital Investors, L.P. (%) 8.2 BV Per Share (HK$) PE (X) H Shares-Free Float (%) 67.2 P/Cash Flow (X) nm m Avg. Daily Val. (US$m) 75.2 P/Free CF (X) nm nm EV/EBITDA (X) Net Div Yield (%) P/Book Value (X) Net Debt/Equity (X) ROAE (%) Earnings Rev (%): Nil Nil Nil Consensus EPS (RMB) Other Broker Recs: B: 15 S: 2 H: 4 Income Statement (RMB m) Balance Sheet (RMB m) FY Dec 216A 217F 218F 219F FY Dec 216A 217F 218F 219F Turnover 1,28 16, ,45 13,338 Net Fixed Assets 42,97 44,895 46,66 46,471 Cost of Goods Sold (81,189) (85,839) (93,671) (14,717) Invts in Assocs & JVs 2,245 1, Gross Profit 19,18 2,538 22,734 25,621 Other LT Assets 21,52 2,837 19,784 18,585 Other Opg (Exp)/Inc (9,574) (1,685) (11,533) (12,927) Cash & ST Invts 7,694 8,466 8,28 8,232 Operating Profit 9,444 9,853 11,2 12,694 Inventory 17,378 19,116 21,28 23,131 Other Non Opg (Exp)/Inc (629) (532) (582) (521) Debtors 45,733 5,36 55,337 6,87 Associates & JV Inc (6) (66) (759) (67) Other Current Assets 7,549 8,43 9,321 1,31 Net Interest (Exp)/Inc (1,647) (1,518) (1,384) (1,333) Total Assets 145,71 153,635 16, ,318 Dividend Income Exceptional Gain/(Loss) ST Debt 32,928 39,928 42,928 45,928 Pre-tax Profit 6,568 7,143 8,475 1,233 Other Current Liab 45,389 42,726 41,88 39,11 Tax (1,88) (1,429) (1,441) (1,74) LT Debt 9,339 9,339 9,339 9,339 Minority Interest (428) (857) (73) (849) Other LT Liabilities 2,5 2,5 2,5 2,5 Preference Dividend (216) (228) (228) (228) Shareholder s Equity 51,256 54,626 59,569 65,382 Net Profit 4,836 4,629 6,13 7,416 Minority Interests 4,153 5,11 5,714 6,563 Net profit before Except. 4,836 4,629 6,13 7,416 Total Cap. & Liab. 145,71 153,635 16, ,318 EBITDA 15,843 17,265 19,53 21,97 Sales Gth (%) Non-Cash Wkg. Cap 25,271 35,127 44,598 55,211 EBITDA Gth (%) Net Cash/(Debt) (34,573) (4,81) (43,987) (47,35) Opg Profit Gth (%) Effective Tax Rate (%) Cash Flow Statement (RMB m) Segmental Breakdown (RMB m) / Key Assumptions FY Dec 216A 217F 218F 219F FY Dec 216A 217F 218F 219F Pre-Tax Profit 6,568 Revenues (RMB m) Dep. & Amort. 7,28 Batteries & other products 7,13 8,382 9,639 11,85 Tax Paid (1,152) (1,88) (1,429) (1,441) Mobile handset components 38,83 39,225 43,148 47,462 Assoc. & JV Inc/(loss) Automobile & related prodts 55,22 53,771 57,119 63,341 (Pft)/ Loss on disposal of FAs Monorail 5, 6,5 8,45 Chg in Wkg.Cap. (17,331) (1,199) (9,487) (1,914) Total 1,28 16, ,45 13,338 Other Operating CF 3,41 17,265 19,53 21,97 EBIT (RMB m) Net Operating CF (1,846) 5,977 8,587 9,615 Batteries & other products 1,288 Capital Exp.(net) (4,839) (8,) (8,) (8,) Mobile handset components 1,746 Other Invts.(net) Automobile & related prodts 6,74 Invts in Assoc. & JV (5) Monorail 1 Div from Assoc & JV Total 9,19 Other Investing CF (8,582) (971) (656) (485) EBIT Margins (%) Net Investing CF (13,421) (8,971) (8,656) (8,985) Batteries & other products Div Paid (1,53) (1,487) (1,389) (1,831) Mobile handset components Chg in Gross Debt 5,128 7, 3, 3, Automobile & related prodts Capital Issues 14,369 Monorail N/A... Other Financing CF (2,174) (1,747) (1,728) (1,848) Total Net Financing CF 16,27 3,766 (117) (679) Key Assumptions Currency Adjustments 97 Electric Vehicles (BEV) Chg in Cash 1,1 772 (186) (49) (' units) Source: Company, DBS Vickers Page 18

19 Dongfeng Motor Group (489 HK EQUITY, HK$9.73, HOLD, Target Price 12-mth HK$ 11.) (under review) Forecast & Valuation General Data FY Dec (RMB m) 216A 217F 218F 219F At A Glance Turnover 122, , , ,946 Issued Capital - H shares (m shs) 2,856 EBITDA 18,176 18,84 19,496 2,996 - Non H shrs (m shs) 5,76 Pre-tax Profit 15,739 16,36 17,31 18,54 H shs as a % of Total 33 Net Profit 13,355 13,899 14,46 15,572 Net Pft (Pre Ex) (core profit) 13,355 13,899 14,46 15,572 Total Mkt. Cap (HK$m/US$m) 83,835 / 1,713 Net Profit Gth (Pre-ex) (%) Major Shareholders EPS (RMB) Dongfeng Motor Corp. (%) 66.9 EPS (HK$) Major H Shareholders (%) EPS Gth (%) Westwood Global Investments, LLC 8.1 Diluted EPS (HK$) Allan & Gill Gray Foundation 6. DPS (HK$) Citigroup Inc. 5.9 BV Per Share (HK$) PE (X) BlackRock, Inc 5.9 P/Cash Flow (X) 18.9 nm nm nm H Shares-Free Float (%) 74.1 P/Free CF (X) 82.7 nm nm nm 3m Avg. Daily Val. (US$m) 17.3 EV/EBITDA (X) Net Div Yield (%) P/Book Value (X) Net Debt/Equity (X) CASH CASH CASH CASH ROAE (%) Earnings Rev (%): Nil Nil Nil Consensus EPS (RMB) Other Broker Recs: B: 9 S: 1 H: 16 Income Statement (RMB m) Balance Sheet (RMB m) FY Dec 216A 217F 218F 219F FY Dec 216A 217F 218F 219F Turnover 122, , , ,946 Net Fixed Assets 13,871 14,128 14,417 14,727 Cost of Goods Sold (14,95) (15,927) (18,79) (11,249) Invts in Assocs & JVs 53,147 58,2 63,93 68,978 Gross Profit 17,517 17,244 17,887 18,697 Other LT Assets 23,389 23,67 22,745 22,423 Other Opg (Exp)/Inc (14,895) (14,619) (14,999) (15,272) Cash & ST Invts 37,373 39,399 41,567 43,878 Operating Profit 2,622 2,625 2,888 3,426 Inventory 8,734 9,67 1,568 11,625 Other Non Opg (Exp)/Inc Debtors 39,773 44,167 49,83 54,59 Associates & JV Inc 13,562 14,15 14,575 15,559 Other Current Assets 8,672 9,539 1,493 11,542 Net Interest (Exp)/Inc (445) (469) (432) (445) Total Assets 184, ,99 211, ,764 Dividend Income Exceptional Gain/(Loss) ST Debt 7,39 7,89 8,39 8,89 Pre-tax Profit 15,739 16,36 17,31 18,54 Other Current Liab 62,859 62,171 61,96 62,137 Tax (1,274) (1,186) (1,228) (1,49) LT Debt 7,8 7,8 7,8 7,8 Minority Interest (1,11) (1,221) (1,343) (1,477) Other LT Liabilities 4,153 4,153 4,153 4,153 Preference Dividend Shareholder s Equity 96,65 18, ,45 134,636 Net Profit 13,355 13,899 14,46 15,572 Minority Interests 6,98 8,129 9,472 1,95 Net profit before Except. 13,355 13,899 14,46 15,572 Total Cap. & Liab. 184, ,99 211, ,764 EBITDA 18,176 18,84 19,496 2,996 Sales Gth (%) (3.3) Non-Cash Wkg. Cap (5,68) 1,142 8,238 15,621 EBITDA Gth (%) Net Cash/(Debt) 22,984 24,51 26,178 27,989 Opg Profit Gth (%) Effective Tax Rate (%) Page 19

20 Cash Flow Statement (RMB m) Segmental Breakdown (RMB m) / Key Assumptions FY Dec 216A 217F 218F 219F FY Dec 216A 217F 218F 219F Pre-Tax Profit 15,739 16,36 17,31 18,54 Revenues (RMB m) Dep. & Amort. 2,58 2,65 2,33 2,11 Passenger vehicles 15, , ,88 138,734 Tax Paid (1,182) (1,274) (1,186) (1,228) Commercial vehicles 1,369 1,669 1,979 11,297 Assoc. & JV Inc/(loss) (13,562) (14,15) (14,575) (15,559) Financial business 911 1,184 1,539 2, (Pft)/ Loss on disposal of FAs (389) (299) (387) (428) Total JCE revenue 114,21 125, ,73 149,327 Chg in Wkg.Cap. 916 (6,734) (7,138) (7,646) Bold total JCE revenue above N/A N/A N/A N/A Other Operating CF 18 (469) (432) (445) Delete total row below - keep N/A N/A N/A N/A Net Operating CF 3,598 (4,556) (4,653) (4,754) Total 122, , , ,946 Capital Exp.(net) (2,775) (2,) (2,) (2,) Gross profit (RMB m) Other Invts.(net) Passenger vehicles 27,759 3,41 32,843 35,932 Invts in Assoc. & JV (1,233) (8) (8) (8) Commercial vehicles 1,918 1,899 2,9 2,67 Div from Assoc & JV 9,192 9,376 9,563 9,755 Financial business N/A N/A N/A N/A Other Investing CF (3,797) Total JCE revenue N/A N/A N/A N/A Net Investing CF 1,387 8,64 8,32 8,548 Bold total JCE revenue above N/A N/A N/A N/A Div Paid (1,723) (1,982) (1,982) (1,982) Delete total row below - keep N/A N/A N/A N/A Chg in Gross Debt (1,375) Total 29,678 31,94 34,852 38, Capital Issues Gross profit Margins (%) Other Financing CF (1,18) Passenger vehicles Net Financing CF (4,116) (1,482) (1,482) (1,482) Commercial vehicles Currency Adjustments Financial business.... Chg in Cash 869 2,26 2,167 2,311 Total JCE revenue.... Bold total JCE revenue above N/A N/A N/A N/A Delete total row below - keep N/A N/A N/A N/A Total Key Assumptions DF Nissan (' units) 1, , , ,245.4 DF Honda (' units) DF PSA (' units) DF self - PV (' units) DF self - CV (' units) Source: Company, DBS Vickers Page 2