Citi: Reduces the target price for Huachen China (01114) to HKD 2.7, as Huachen BMW's second-quarter performance disappoints expectations.

According to a report by Citigroup obtained by Zhito Finance APP, based on BMW's second-quarter performance, it is estimated that the net profit of the joint venture BMW Brilliance Automotive Co., Ltd. with Brilliance China Automotive Holdings Limited (01114) will decline by 52% year-on-year in the first half of the year, falling short of market expectations. According to International Financial Reporting Standards, BMW Brilliance is expected to record a net loss of 1 billion yuan in the second quarter, marking a loss both year-on-year and quarter-on-quarter. Citigroup has lowered its sales forecasts for BMW Brilliance for this year and next year from 491,000 and 463,000 vehicles to 420,000 and 380,000 vehicles, respectively, and has reduced its net profit margin forecasts from 6.2% and 6% to 4.1% and 3.6%, resulting in a downward adjustment of Brilliance China's net profit forecast for this year and next by 45% to 49%, bringing it to 1.26 billion and 1.1 billion yuan. Citigroup maintains a "Buy/High Risk" rating for Brilliance China, with the target price lowered from HKD 3.9 to HKD 2.7.