Morgan Stanley analyst Joey Xu maintained a Sell rating on BAIC Motor (BMCLF – Research Report) today and set a price target of HK$1.70.
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Joey Xu has given his Sell rating due to a combination of factors impacting BAIC Motor’s financial outlook. The analyst has revised the revenue forecasts downward by 2% and 5% for 2025 and 2026, respectively, primarily due to declining sales from BAIC-Mercedes, which saw a 13% drop. Additionally, the gross profit margin forecasts were reduced by 2 percentage points for both years, reflecting a missed target in 2024 and challenges in achieving scale.
Furthermore, despite some improvement in the company’s proprietary brands, with a 37% year-over-year sales increase, the net profit after tax forecasts were also lowered by 13% and 11% for 2025 and 2026. These adjustments in revenue and margin estimates have led to a decrease in the discounted cash flow-based price target by approximately 6% to HK$1.70. These financial adjustments underpin the Sell rating, as they indicate a less favorable risk-reward scenario for the stock.