Brilliance Auto expects to beat sales growth target
Mainland carmaker on track to sell more than 200,000 units after 25 per cent rise in 4 months
Brilliance China Automotive Holdings said yesterday it was likely to exceed a sales growth target of 25 per cent for this year, but analysts said the mainland carmaker's new clean-energy-vehicle project and a product upgrade by rival Mercedes-Benz could pressure short-term profit.
The mainland partner of BMW disclosed at its annual general meeting that sales jumped 25 per cent year on year to 67,000 cars during the first four months of the year. It also forecast that by the end of the year sales could exceed its target of 200,000 units.
However, research and development costs incurred in building an electric car to be marketed early next year have sparked market concerns about the company's profit margin.
Analysts said it was unlikely to get a quick return on its investment - expected to top 1.5 billion yuan (HK$1.9 billion) this year - because electric cars were not popular yet.
But chief executive and president Qi Yumin said new energy vehicles were the way to go in the long run. "It is a global trend and a policy of the central government, and we will collaborate with it," he said
He said the company would minimise the project's financial impact by moving ahead in stages.
Responding to a question about a rumoured additional duty on luxury vehicles priced above 1.7 million yuan after import tax, Qi said he had not heard anything about such a tax. But he added that a competitive company could grow stronger in response to challenges.
HSBC analyst Carson Ng wrote in a report the rumoured tax should not have a big impact on BMW's revenue because only a limited amount of its products fitted that description.
It continued to rate Brilliance Auto as one of its top picks among car stocks and said its share price could exceed HK$13.50 by the end of the year, although it warned that BMW's sales could be affected in the second half by a major facelift at Mercedes-Benz.
Brilliance Auto shares yesterday closed 2.47 per cent lower at HK$8.67.