Analyst Research Report Snapshot


Brilliance China (1114 HK, HK$13.8, N): Downgrade to Neutral




KGI Greater China


08 Nov 2013





Companies referenced:


Available for Immediate Download

R&D expense booking delayed to 4Q13 3Q13 Brilliance BMW profit more than 40% above our estimate as most R&D expense booking delayed to 4Q13 2013F diluted EPS raised 2% to Rmb0.64 on stronger than expected profit in first 9 months; 2014F diluted EPS cut 1% to Rmb0.79 as previous unit sales estimate was too aggressive and product mix change turns adverse in 2014 Investor concerns will emerge about margin pressure on R&D expense booking in 4Q13 and adverse product mix change in 2014; target price raised to HK$14.10 on 14x 2014F PE; with 2% upside, downgrade to Neutral Brilliance BMW is on a fast growth track fueled by China's strong demand for luxury cars and the company's aggressive capacity increase plan. The stock has gained nearly 30% since we upgraded it to Outperform in August. But we now think most positives are already priced in. Looking ahead, investor concerns will emerge about margin pressure on R&D expense booking in 4Q13 and adverse product mix change in 2014. We have rolled over to 2014 and raise our 12-month target price from HK$12.80 to HK$14.10, based on 14x 2014F PE (previously 16x 2013F PE). Our target PE multiple 14x is the average of Brilliance China's 3-year historic forward-looking PE, which we think is reasonable. Our new target price implies 2% upside based on yesterday's closing price of HK$13.80. Downgrade to Neutral.

Why buy analyst research?

  • Institutional quality research
  • Available for Immediate Download
  • Detailed company or industry insight
  • Print or save
  • 24 hour customer support
Return to previous page without adding this item to your cart.
Email Customer Support.

About Analyst Research

Analyst research reports are available for immediate download after purchase. You will have unlimited access to the report for 24 hours after purchase, to download, print or save it as many times as you wish. Analyst Research provided by Reuters does not constitute investment advice, and is not endorsed by Reuters Research. This information is protected by copyright and intellectual property laws. More information on Analyst Research.