Changan Automobile (000625): Proposed Transfer of Changan PSA Assets Reduces Focus on Main Business
Core point of view The company signed an agreement to sell 50% of Changan PSA’s equity, reducing the number of cuts and going into battle.The company’s announcement recently signed an agreement with Qianhai Ruizhi, intending to pay 16.Changan PSA’s shareholding was transferred for a price of US $ 3 million.Changan PSA mainly produces DS models of French luxury brands, with operating income of 9 in January and September of 2019.15 and 8.1.2 billion, net profit was -8.7.4 billion-22.33 trillion; Changan PSA reduced the amount of deduction, mainly due to the increase in sales, provision for impairment of fixed assets, inventory, and confirmation of expected compensation.The proposed sale of Changan PSA equity will effectively reduce the drag on company profits. It is expected that the profit brought by the proposed sale of equity will affect the 2020 financial report, and the company will further focus on its core business.As of September 30, 2019, Changan PSA’s net assets were -5.19 trillion, valued at 32.4.6 billion, value-added rate of 725%.The transaction will generate 13 on the company’s consolidated statement.The $ 5.2 billion pre-tax profit is expected to be completed in 2020, which will affect the 2020 financial report.The 北京夜生活网 company intends to sell Changan PSA’s equity to divest the company’s consolidated assets. The company will further focus on Changan’s independent brands. The core businesses of Changan Ford and Changan Mazda will help the company to further improve its profitability and long-term stable business development. In 2020, Changan Ford will launch a number of new cars, and its profit will gradually improve. Changan CS75Plus and Auchan X7 are selling well, which is expected to effectively drive improvement of independent profit.Changan Ford’s new model, the Ruiji, was officially launched in December.The 0T4-cylinder engine and all-aluminum suspension configuration are highly cost-effective among joint-venture brands of the same level.As of December 29, Ruiji’s order for 10 days has exceeded 3,000.Changan’s own brand CS75 Plus sold 杭州桑拿养生会所 1 in 11 months.90,000 vehicles, sales continue to climb; Auchan X7 has been on the market since the end of November until December 29 orders have exceeded 3.50,000 vehicles, the first month sales have reached 1.10,000 vehicles.Changan CS75Plus and Auchan X7 have been selling well. Changan Ford launched the Ford brand and Lincoln model in 2020. Changfu’s profit is also trying to improve. Financial forecast and investment advice: The forecast for 2019-2021 is 0.09, 0.81, 1.05 yuan, due to the company’s expectations, we use PB for estimation.Comparable companies have an average PB of 1 in 19 years.About 33 times, the company will be given PB1 in 2019.33 times estimate, target price 12.9 yuan, maintain BUY rating. Risk warning: Changan Ford sales volume is lower than expected risk, Changan Mazda sales volume is lower than expected risk, Changan independent brand sales volume is lower than expected risk.