Transition Pressure Likely to Persist; EW

研报英文原文证据摘录

Transition Pressure Likely to Persist; EW

UpdateM

Estimate Changes and Valuation methodology

Estimate changes

We lower our financial forecasts to incorporate BAIC's recent reporting and sales trends.

• We reduce our revenue forecasts by 29% for 2026 and 42% for 2027, mainly to

reflect sales pressure at the company's JV, BAIC-Mercedes, which saw a 28.9% YoY

sales decline for 5M26. That said, this could be partly offset by proprietary brand

sales improvements at BAIC – we expect a 40% YoY increase for 2026, vs. a 16%

YoY rise in 2025 and 85% YoY increase for 5M26.

• Our gross profit margin forecasts fall significantly, by 9ppts for 2026 and 11ppts for

2027, after a 3ppt miss in 2025 as well as a 6ppt slippage for 1Q26 to 8.7%.

• Overall, we think BAIC could post a full-year loss in 2026, which would be the first

since its listing in 2014. This would reflect shrinking profit contribution from the JV

as well as still sizable losses at the proprietary brands, which saw operational

improvement in recent periods but still lagging financial performance.

• We introduce financial forecasts for 2028. We expect BAIC to experience a difficult

transition period, as experienced by SOE peers, with narrowing contributions from

BAIC-Mercedes and gradual incremental contribution from its proprietary brands.

This could take some time, and we see losses across our forecast period of 2026-

28.

Exhibit 1: Estimate changes

Before change After change Change (%)

Rmb Mn 2026E 2027E 2026E 2027E 2028E 2026E 2027E

Revenue 168,884 173,529 120,575 100,439 98,430 (29) (42)

Gross Profit 26,177 27,765 7,945 4,610 4,921 (70) (83)

Operating profit 14,742 15,847 2,708 1,033 1,856 (82) (93)

Net Profit 1,832 2,758 (831) (1,490) (984) (145) (154)

EPS 0.23 0.34 (0.10) (0.19) (0.12) (145) (154)

Change (ppt)