ZHENGZHOU YUTONG BUS CO.,LTD. is a China-based company principally engaged in the research and development, manufacture and sale of passenger car products. The main products of the Company consist of urban buses, seat coaches, school coaches and other types of passenger cars. The Company also provides ground passenger transportation services. The Company distributes its products within domestic markets and to overseas markets.
theScreener is the market leader for independent valuations of financial securities, equities, sectors and markets, and new funds. theScreener's ratings, analyses are used by leading banks, asset managers and financial portals. Approximately 10,000 workstations benefit from theScreener's services, with over millions of customer accounts actively analysed.
Yutong’s 2Q19 core net profit grew 12% yoy to Rmb275m, better than our estimates due to less-than-expected margin erosion. We keep our 2019-21 net profit forecasts despite the earnings beat in 1H19, as we expect the EV subsidy cuts taking effect on 26 Jun 19 to pressure the sales and margins of its electric buses in 2H19. Our net profit estimates are 30-50% below consensus forecasts due to our below-consensus margin and sales volume assumptions. Maintain SELL. Target price: Rmb6.00.
Last month, we upgraded the automobile sector on the back of the stimulus package proposed by the NDRC. But the stimulus has not been launched so far as it may be subject to adjustments. This, along with the escalating Sino-US trade war and transition in emission standard, is dragging auto sales. We still expect the auto industry to recover although the recovery will be delayed from 2Q19 to 3Q19, given the timing of the stimulus. We cut 2019-21 EPS forecasts and target prices by 15%. Maintain OVERWEIGHT. Top pick: Geely.
Narrow-moat Yutong reported first-quarter earnings in line with our estimates. Stronger- than-expected gross margin was offset by higher research and development costs. Shares of narrow-moat Yutong Bus are trading at more than 25% below our fair value estimate of HKD 17.70 per share, putting them in 4-star territory. Despite falling sales volume across the industry during the first quarter of 2019, Yutong sold 6% more buses than it did a year ago, reaffirming the firm’s market-leading position. Falling average selling prices from reduced government subsidies resulted in a 4% increase in Yuton...
CLICKS GROUP LIMITED (ZA), a company active in the Drug Retailers industry, reduced its market risk and raised its general evaluation. The independent financial analyst theScreener awarded an improved star rating to the company, which now shows 2 out of 4 possible stars; its market behaviour has improved and can be considered as defensive. theScreener believes that this new assessment merits an overall rating upgrade to Slightly Positive. As of the analysis date November 12, 2019, the closing price was ZAR 253.90 and its potential was estimated at ZAR 269.63.
NETCARE LTD. (ZA), a company active in the Health Care Providers industry, now shows a lower overall rating. The independent financial analyst theScreener just confirmed the fundamental rating of 2 stars out of 4, as well as the stock market behaviour of the title as moderately risky. However, environmental deterioration penalises the general evaluation, which is downgraded to Neutral. As of the analysis date November 12, 2019, the closing price was ZAR 16.83 and its expected value was estimated at ZAR 17.28.
The independent financial analyst theScreener just awarded an improved star rating to WESCO INTL.INCO. (US), active in the Electrical Components & Equipment industry. As regards its fundamental valuation, the title receives an improved star rating and now shows 4 out of 4 possible stars. With regard to its market behaviour, it remains unchanged and can be qualified as risky. theScreener considers that these elements allow slightly upgrading its rating to Neutral. As of the analysis date November 12, 2019, the closing price was USD 54.52 and its expected value was estimated at USD 48.88.
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