SEHK:2238

Stock Analysis Report

Guangzhou Automobile Group

Executive Summary

Guangzhou Automobile Group Co., Ltd., together with its subsidiaries, engages in the research, development, manufacture, and sale of vehicles and motorcycles, and parts and components; and provision of commercial and financial services in Mainland China and Hong Kong.

Rewards

PE ratio (11.5x) is below the Auto industry average (11.5x)

Earnings are forecast to grow 21.67% per year

Risk Analysis

High level of non-cash earnings

Unstable dividend track record

Shareholders have been diluted in the past year



Snowflake Analysis

Adequate balance sheet second-rate dividend payer.


Similar Companies

HUAYU Automotive Systems

SHSE:600741

Share Price & News

How has Guangzhou Automobile Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 2238 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-8.9%

2238

-2.7%

HK Auto

-0.2%

HK Market


1 Year Return

7.2%

2238

6.1%

HK Auto

4.5%

HK Market

Return vs Industry: 2238 underperformed the Hong Kong Auto industry which returned 9.9% over the past year.

Return vs Market: 2238 exceeded the Hong Kong Market which returned 6.4% over the past year.


Shareholder returns

2238IndustryMarket
7 Day-8.9%-2.7%-0.2%
30 Day-1.2%5.9%3.6%
90 Day9.3%6.9%7.8%
1 Year12.7%7.2%10.4%6.1%8.4%4.5%
3 Year35.9%20.4%9.9%0.4%26.8%13.9%
5 Year111.2%76.8%16.7%0.2%21.0%0.9%

Price Volatility Vs. Market

How volatile is Guangzhou Automobile Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Guangzhou Automobile Group undervalued compared to its fair value and its price relative to the market?

11.12x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: 2238 (HK$9.76) is trading above our estimate of fair value (HK$6.07)

Significantly Below Fair Value: 2238 is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: 2238 is good value based on its PE Ratio (11.5x) compared to the Auto industry average (11.5x).

PE vs Market: 2238 is poor value based on its PE Ratio (12x) compared to the Hong Kong market (10.5x).


Price to Earnings Growth Ratio

PEG Ratio: 2238 is good value based on its PEG Ratio (0.6x)


Price to Book Ratio

PB vs Industry: 2238 is overvalued based on its PB Ratio (1.1x) compared to the HK Auto industry average (0.6x).


Next Steps

Future Growth

How is Guangzhou Automobile Group forecast to perform in the next 1 to 3 years based on estimates from 23 analysts?

18.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 2238's forecast earnings growth (21.7% per year) is above the savings rate (1.6%).

Earnings vs Market: 2238's earnings (21.7% per year) are forecast to grow faster than the Hong Kong market (11.3% per year).

High Growth Earnings: 2238's earnings are forecast to grow, but not significantly.

Revenue vs Market: 2238's revenue (8.2% per year) is forecast to grow slower than the Hong Kong market (10.2% per year).

High Growth Revenue: 2238's revenue (8.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 2238's Return on Equity is forecast to be low in 3 years time (12.3%).


Next Steps

Past Performance

How has Guangzhou Automobile Group performed over the past 5 years?

23.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 2238 has a high level of non-cash earnings.

Growing Profit Margin: 2238's current net profit margins (11.9%) are lower than last year (15.9%).


Past Earnings Growth Analysis

Earnings Trend: 2238's earnings have grown significantly by 23.7% per year over the past 5 years.

Accelerating Growth: 2238's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 2238 had negative earnings growth (-36.9%) over the past year, making it difficult to compare to the Auto industry average (-11.2%).


Return on Equity

High ROE: 2238's Return on Equity (9.1%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Guangzhou Automobile Group's financial position?


Financial Position Analysis

Short Term Liabilities: 2238's short term assets (CN¥47.3B) exceed its short term liabilities (CN¥30.8B).

Long Term Liabilities: 2238's short term assets (CN¥47.3B) exceed its long term liabilities (CN¥12.9B).


Debt to Equity History and Analysis

Debt Level: 2238's debt to equity ratio (15.8%) is considered satisfactory.

Reducing Debt: 2238's debt to equity ratio has reduced from 43.5% to 15.8% over the past 5 years.

Debt Coverage: 2238's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: Insufficient data to determine if 2238's interest payments on its debt are well covered by EBIT.


Balance Sheet

Inventory Level: 2238 has a high level of physical assets or inventory.

Debt Coverage by Assets: 2238's debt is covered by short term assets (assets are 3.6x debt).


Next Steps

Dividend

What is Guangzhou Automobile Group's current dividend yield, its reliability and sustainability?

4.12%

Current Dividend Yield


Dividend Yield vs Market

company4.1%marketbottom25%2.2%markettop25%6.1%industryaverage3.0%forecastin3Years4.3%

Current dividend yield vs market & industry

Notable Dividend: 2238's dividend (3.82%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.17%).

High Dividend: 2238's dividend (3.82%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.02%).


Stability and Growth of Payments

Stable Dividend: 2238 has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: 2238's dividend payments have increased, but the company has only paid a dividend for 9 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (45.8%), 2238's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 2238's dividends in 3 years are forecast to be well covered by earnings (33.7% payout ratio).


Next Steps

Management

What is the CEO of Guangzhou Automobile Group's salary, the management and board of directors tenure and is there insider trading?

4.2yrs

Average management tenure


CEO

Xingya Feng (52yo)

3.2yrs

Tenure

CN¥1,387,000

Compensation

Mr. Feng Xingya has been General Manager of Guangzhou Automobile Group Co., Ltd. since November 22, 2016 and served as its Deputy General Manager since July 2008 until November 21, 2016. Mr. Xingya serves  ...


CEO Compensation Analysis

Compensation vs Market: Xingya's total compensation ($USD201.32K) is below average for companies of similar size in the Hong Kong market ($USD1.00M).

Compensation vs Earnings: Xingya's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Management Age and Tenure

4.2yrs

Average Tenure

56yo

Average Age

Experienced Management: 2238's management team is considered experienced (4.2 years average tenure).


Board Age and Tenure

4.8yrs

Average Tenure

54yo

Average Age

Experienced Board: 2238's board of directors are considered experienced (3.3 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


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Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 2.5%.


Management Team

  • Qinghong Zeng (58yo)

    Chairman

    • Tenure: 3.3yrs
    • Compensation: CN¥1.20m
  • Jinpei He (55yo)

    Head of Dept. of Discipline Inspection & Supervision and Staff Representative Supervisor

    • Tenure: 2.1yrs
    • Compensation: CN¥101.00k
  • Shao Li (56yo)

    Deputy General Manager

    • Tenure: 13yrs
  • Song Wu (56yo)

    Standing Deputy General Manager

    • Tenure: 2.8yrs
  • Xingya Feng (52yo)

    GM & Executive Director

    • Tenure: 3.2yrs
    • Compensation: CN¥1.39m
  • Dan Wang (49yo)

    CFO & Deputy General Manager

    • Tenure: 15yrs
  • Qingsong Zhang (60yo)

    Deputy General Manager

    • Tenure: 4.6yrs
  • Hanjun Chen (57yo)

    Deputy General Manager

    • Tenure: 3.8yrs
  • Li Canhui

    Manager of the Accounting Department

    • Li Sui (51yo)

      Company Secretary & Head of the Office of the Board


      Board Members

      • Roger Leung (65yo)

        Independent Non-Executive Director

        • Tenure: 6.1yrs
        • Compensation: CN¥150.00k
      • Qinghong Zeng (58yo)

        Chairman

        • Tenure: 3.3yrs
        • Compensation: CN¥1.20m
      • Hongxiang Ding (53yo)

        Non-Executive Director

        • Tenure: 1.4yrs
      • Jinpei He (55yo)

        Head of Dept. of Discipline Inspection & Supervision and Staff Representative Supervisor

        • Tenure: 2.1yrs
        • Compensation: CN¥101.00k
      • Xingya Feng (52yo)

        GM & Executive Director

        • Tenure: 3.2yrs
        • Compensation: CN¥1.39m
      • Yuwu Fu (74yo)

        Independent Non-Executive Director

        • Tenure: 6.1yrs
        • Compensation: CN¥150.00k
      • Maoshan Chen (55yo)

        Non-Executive Director

        • Tenure: 4.8yrs
        • Compensation: CN¥1.25m
      • Susheng Wang (50yo)

        Independent Non-Executive Director

        • Tenure: 6.1yrs
        • Compensation: CN¥150.00k
      • Li Ji (53yo)

        Chairman of Supervisory Committee

        • Jiang Xiuyun (51yo)

          Staff Supervisor & Head of the Audit Department

          • Tenure: 2.4yrs

        Company Information

        Guangzhou Automobile Group Co., Ltd.'s company bio, employee growth, exchange listings and data sources


        Key Information

        • Name: Guangzhou Automobile Group Co., Ltd.
        • Ticker: 2238
        • Exchange: SEHK
        • Founded: 1997
        • Industry: Automobile Manufacturers
        • Sector: Automobiles
        • Market Cap: HK$122.827b
        • Shares outstanding: 10.24b
        • Website: https://www.gac-motor.com

        Number of Employees


        Location

        • Guangzhou Automobile Group Co., Ltd.
        • No.633, East Road of Jinshan Avenue
        • Panyu District
        • Guangzhou
        • Guangdong Province
        • 511434
        • China

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        2238SEHK (The Stock Exchange of Hong Kong Ltd.)YesForeign Shares-Foreign ListedHKHKDAug 2010
        GNZU.FOTCPK (Pink Sheets LLC)YesForeign Shares-Foreign ListedUSUSDAug 2010
        02GDB (Deutsche Boerse AG)YesForeign Shares-Foreign ListedDEEURAug 2010
        2238SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesForeign Shares-Foreign ListedHKHKDAug 2010
        2238SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesForeign Shares-Foreign ListedHKHKDAug 2010
        601238SHSE (Shanghai Stock Exchange)Domestic SharesCNCNYApr 2012
        601238XSSC (Shanghai Stock Exchange - Shanghai - Hong Kong Stock Connect)Domestic SharesCNCNYApr 2012

        Biography

        Guangzhou Automobile Group Co., Ltd., together with its subsidiaries, engages in the research, development, manufacture, and sale of vehicles and motorcycles, and parts and components; and provision of commercial and financial services in Mainland China and Hong Kong. The company operates through two segments, Vehicles and Related Operations, and Others. It offers large to medium sized passenger vehicles, light and heavy trucks, construction vehicles, and energy vehicles; motorcycles comprising standard motorcycles, sport bikes, scooters, etc.; and auto-parts, including engines, gearboxes, car seats, HVAC systems, auto lamps, automation accessories, redirectors, shock absorbers, and accessories. It is also involved in the automobile disassembling and automobile credit activities; trade of steel; and the provision of automobile financing, logistics, after-sale, and automobile insurance services, as well as investment and investment management activities. The company was founded in 1997 and is headquartered in Guangzhou, the People’s Republic of China. Guangzhou Automobile Group Co., Ltd. is a subsidiary of Guangzhou Automobile Industry Group Co., Ltd. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/20 12:54
        End of Day Share Price2020/01/20 00:00
        Earnings2019/09/30
        Annual Earnings2018/12/31


        Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.