标普+中国汽车：需求疲软加剧竞争-2023-10-市场解读

ClaireYuan

Director

ChinaAuto:

SoftDemandHeightensCompetition

StephenChan

AssociateDirector

ChinaManufacturingTeam

CorporateRatings

October10,2023

Thisreportdoesnotconstitutearatingaction

KeyTakeaways

•Whatdoweexpectoverthenext12months?

•

•

China’sdomesticlightvehiclesalestoincreaseby0%-2%in2023-2024.

Growthindomesticelectricvehiclesaleswilldecelerateto15%-25%overtheperiod.

•Downsiderisks:

•

•

•

Macroheadwindscastuncertaintyonlightvehicledemand.

Prolongedpricewarsandrisingelectrificationweighoncarmakers’marginsandcashflows.

TradehurdleswouldcomplicateChinesecarmakers’expansionoverseas.

•Creditimplication:

•

•

•

RatingdowngraderiskhasheightenedforGeelyentities.ZhejiangGeely’sEBITDAmarginfellto4.3%inthefirsthalfof2023.

WeseeratingbuffersforBeijingAuto,BAICMotor,JohnsonElectric,andYanfengInternational.

ThepositiveratingoutlookonCATLreflectsourexpectationofimprovingbusinessstrengthandsustainednetcashposition.

2

MutedMomentumAhead

LVsalestoseelimitedgrowthin2023-2024

China’sdomesticlightvehicle(LV)

salescouldrise0%-2%in2023-2024.

•

Chinalightvehiclesales(leftscale)

30

Year-on-yearchange(rightscale)

2%

•Unitsalesinthefirsteightmonthsthis

25

20

15

10

5

0%

yearwerelargelyflat.

-2%

-4%

-6%

-8%

-10%

•Continuouspricecuts,betterseasonality

willsupportsalesfortherestoftheyear.

•Softconsumersentimentamidmacro

headwindswillconstraingrowthin2024.

0

2017

2018

2019

2020

2021

2022

2023e

2024e

•Salesgrowthofdomesticelectriclight

vehicleswilllikelydeceleratetoc.15%-

25%over2023-2024.

EVsalesgrowthdecelerating

EVsales(leftscale)

12

YoY(rightscale)

EVpenetration(rightscale)

•Saleswereupabout30%(excluding

exports)inthefirsteightmonthsthis

year.

•Improvingproductofferingsandpurchase

incentivescontinuetosupportrising

electricvehicle(EV)adoption.

150%

100%

50%

0%

9

6

3

0

•EVpenetrationcouldrisetoward40%by

2019

2020

2021

2022

2023e

2024e

2025e

2025.

LV--Lightvehiclesincludepassengervehiclesandlightcommercialvehicles.EV--Electriclightvehicle.YoY--Yearonyear.e--Estimate.

Sources:ChinaAssociationofAutomobileManufacturers,Wind,S&PMobility,S&PGlobalRatings.

3

CompetitionIsEscalating

Localbrandscontinuetogaintraction

WeexpectChineselocalbrandsin

aggregatetomaintainsolidmarketposition

overthenext24months.

•

Chinaproprietary

Germanbrands

Japanesebrands

U.S.brands

Others

100%

80%

60%

40%

20%

0%

9%

8%

9%

10%

23%

8%

10%

20%

•WithrisingEVpenetration,international

brandswhicharenormallylaggardsinEV

havebeenlosingedge.Increasing

collaborationsbetweenforeignandChinese

EVautomakers,toleveragethelatter’s

productionplatformandsoftware

capability,couldbecomeatrendinthenext

12-24months.

17%

20%

22%

24%

21%

50%

21%

22%

41%

25%

22%

41%

26%

36%

47%

38%

2018

2019

2020

2021

2022

8M2023

Sources:ChinaPassengerCarAssociation,S&PGlobalRatings.

EVproducersareracingforshare

•TheEVmarketisbecomingmorecrowded

withnewentrantsandrapidlyexpanding

productportfoliosatexistingplayers.Inour

view,industryconsolidationislikelyin3-5

years.

8M2023

2022

BYD

Tesla

GAC

SAIC

Geely

LiAuto

Chang'an

GreatWall

NIO

•

Competitiveproductsandbettercost

controlwillunderpintheleadingpositionfor

BYDandTeslainChina’sEVmarketoverthe

next1-2years.

Hozon

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

PercentageofEVunitsalescapturedbythetop10electriccarmakers

GAC--GuangzhouAutomobileGroup.Sources:ChinaAssociationofAutomobileManufacturers,ChinaPassengerCarAssociation,S&PGlobalRatings.

4

PricingPressureWillRemainHigh

•Softdemandwillkeepthepricingenvironmentunfavorable.Pricecompetitionwilllikelyendureoverthenext12months.

•CarmakersthathaverelativelyhighEVpenetrationyetstillsmallabsoluteEVsalesvolumecouldseemorematerialmargindilution

relativetopeers.

•OEMsthatcanrampupsalesquicklyforbettereconomiesofscaleandcontinuouslyimproveproductofferingswillbebetterableto

offsetthepricingimpactonmargins.

PricewarforEVscouldlingerforlonger

LargerdiscountsonICEstostimulatesales

TeslaModelY

TeslaModel3

BYDSongPlusDmi

2021

2022

2023

MG4(MGMULAN)

16%

14%

12%

10%

8%

400

320

240

160

80

Dec-22

Feb-23

Apr-23

Jun-23

Aug-23

JanFebMarAprMayJunJulAugSepOctNovDec

Sources:ModiA,16888.com,S&PGlobalRatings.

ICE—Internalcombustionengine.ChinaPassengerCarAssociation,S&PGlobalRatings.

5

ChineseCarmakers’OverseasAdventuresWillBeBumpy

China’sautoexportgrowthislikelytodeceleratein2024

China’sautoexportshavejumpedoverthe

•

pastfewyears,benefitingfromresilient

supplychainsandincreasingproduct

competitiveness.

EVexport(leftscale)

ICEexport(leftscale)

PVexport(leftscale)

PVexportYoYgroth(rightscale)

6

110%

90%

70%

50%

30%

10%

5

4

3

2

1

•

•

Passengervehicle(PV)exportscouldreach

4.1millionunitsin2023.

Exportgrowthis

settodeceleratein2024,givenahighbase.

Tradehurdlesareemerging.Theanti-

subsidyprobeannouncedbytheEUonEVs

importedfromChinacouldhinderEVexport

after2024.Europeaccountedforover40%

ofChina’sEVexportsyear-to-date.

0

-10%

2019

2020

2021

2022

8M2023

2023e

2024e

NobreakdownintoEVandICEfor2024.Note:ICE--Internalcombustionengine,PV–passengervehicle.Sources:ChinaAssociationofAutomobile

Manufacturers,ChinaPassengerCarAssociation,ChinaCustoms,S&PGlobalRatings.

TradehurdlescoulddampenEVexport

•Theaboveinvestigationwilllikelyhavea

limitedimpactonratedcarmakers.Among

them,GeelyAutohasthehighestexport

exposure.Exportsaccountedfor17%ofits

totalsalesvolumeinthefirstninemonths,

withdiversifieddestinationsincluding

Eastern&NorthernEurope,theMiddle

East,andSoutheastAsia.

Others

23%

Europe

44%

Oceania

7%

Asia

27%

Sources:ChinaCustoms,ChinaPassengerCarAssociation,S&PGlobalRatings.

6

BatteryMarket–EvolvingCompetitiveLandscape

Thepaceofbatteryinstallationisslowing

Growthinbatteryinstallationswillcontinue

todownshiftoverthenext24monthsasEV

productiongrowthslows.

•

2021(leftscale)

40

2022(leftscale)

2023(leftscale)

2022YoY(rightscale)

2023YoY(rightscale)

200%

•WebelievetheChinesebatterymarketis

oversuppliedwiththeratioofbattery

installation-to-productiondroppingto48%

inthefirsteightmonthsin2023from76%in

2020.

30

20

10

0

150%

100%

50%

0%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

•Thatsaid,majortier-twobatteryproducers

(e.g.,BYD,CALB)havebeengainingmarket

sharesince2022withEVproducers

Tier-twoplayersaregainingshareamidintensifyingcompetition

diversifyingbatterysupplytolowercosts.

CATL

BYD

Gotion

CALB

EveBattery

Others

100%

80%

60%

40%

20%

0%

•Withtechnologyadvantages,strongmarket

reputationanddiversifiedcustomerbases,

CATL'sshareinChinashouldremainat

c.40%.Itssharefellto43%inthefirsteight

monthsof2023amidintensifyingmarket

competition.

2018

2019

2020

2021

2022

8M2023

Note:OnlyCATLisrated--seeslide10fordetails.Gotion--GotionHigh-TechCo.Ltd.CALB--CALBGroupCo.Ltd.Sources:ChinaAutomotiveBatteryInnovation

Alliance,S&PGlobalRatings.

7

ModeratingMaterialCostsMayAlleviateMarginStrainFromThe2H2023

•Lithiumcarbonatepricescouldcontinuetomoderate,duetodemandworriesandgrowingsupplypost-pandemic.

•Fallingrawmaterialpricesandlessrobustdemandshouldcontinuetodragbatterypricesfortherestof2023.

•EVproducersshouldseelowerproductioncostsfromthesecondhalf,afterdigestingrawmaterialinventorypurchasedathighprices.

•Marginsofleadingbatteryproducerscouldimproveslightlywithbettereconomiesofscaleandrawmaterialcostfallingfasterthan

batteryprices.

Lithiumcarbonatepricecouldremainweak

BatterypricetrendingdownsinceFebruary

700,000

Averagepriceofprismaticternarylithium-ionbatterycell

AveragepriceofprismaticLFPbatterycell

1,000

600,000

500,000

400,000

300,000

200,000

100,000

900

800

700

600

500

0

400

Mar-2021Sep-2021Mar-2022Sep-2022Mar-2023Sep-2023

Sep-2021Jan-2022May-2022Sep-2022Jan-2023May-2023Sep-2023

RMB--Chineserenminbi.DDP--Delivereddutypaid.Source:S&PGlobalCommodityInsights.

RMB--Chineserenminbi.LFP--Lithiumironphosphate.Source:

8

ElectrificationIsWeighingOnSelectCarmakers

Geelyisinthefastlaneofelectrification

ZhejiangGeely,GeelyAuto:Whileourbase

casefactoredinimprovingmarginsand

leveragein2024,intensifyingprice

•

•

2023EV

8M2023EV

penetration

penetration

target

competitioncouldhinderthegroup’s

marginrestorationanddeleveraging.

Salesvolume(thousandunits)

ZhejiangGeelyHoldingGroupCo.Ltd.

GeelyAutomobileHoldingsLtd.

BeijingAutomotiveGroupCo.Ltd.

BAICMotorCo.Ltd.

8M2023

1,500-1,600*

985

8M2023YoY

14%-19%*

15%

26%-31%*

25%

n.a.

40%

n.a.

WerevisedtheoutlookonCATLtopositive

inApril2023.Weexpectthecompanyto

holditsNo.1positioninChinaandincrease

presenceinEuropewhilemaintaininganet

cashposition.

1,077

15%

6%-9%*

7%-10%*

650-700*

18%-23%*

n.a.

Note:1)EVpenetrationratereferstoEVsalesasapercentageoftheentity’stotalautosales.2)PenetrationratesofChinaFAWandBeijingAutoareour

estimates.3)EV--Electriclightvehicleincludespureelectricandplug-inhybridelectriclightvehicles.4)*areestimatedranges.,5)8M2023referstothefirst

eightmonthsof2023.YoY--Yearonyear.Sources:Companyreports,S&PGlobalRatings.

•Wegenerallyseeratingbuffersforother

OEMsandsuppliers.Higheroperating

efficiency,lowerrawmaterialcosts,modest

volumegrowthandimprovingproduct

portfoliosshouldunderpinbetterfinancial

metrics.

Fasterelectrificationweighsmoreonprofitability

2019

2020

2021

2022

H12023

20%

15%

10%

5%

0%

ZhejiangGeely

GeelyAutomobile

BeijingAuto

BAICMotor

Note:ZhejiangGeely'sEBITDAmarginiswithproportionateconsolidationofPolestarsince2022.Sources:Companyreports,S&PGlobalRatings.

9

MarginAndLeverageTheKeyRatingDrivers

Ratingdownsidetriggers

Latestforecast

Salesvolume

growthKeyratingdrivers

Company

Issuercreditrating

Leverage

EBITDAMargin

Debt/EBITDA

FFO/debt

EBITDAmargin

BeijingAutomotive

GroupCo.Ltd.

BBB/Stable/--

FFO/Debt<12%

n.a.

2022A:2.9x

H12023:2.7x

2023E:2.5x

2024E:2.3x

2022A:18.8%

H12023:20.7%

2023E:22.7%

2024E:25.1%

2022A:13.6%

H12023:14.8%

2023E:13.3%2023E:14.0%-16.0%

2024E:13.0%

2022A:(15.6%)•SalesmomentumofJVbrands

H12023:22.2%•

Restructureofproprietarybrands

2024E:5.0%-7.0%

BAICMotorCo.Ltd.

BBB/Stable/--

FFO/Debt<12%

Debt/EBITDA>2.0x

Debt/EBITDA>2.0x

Debt/EBITDA~1.5x

n.a.

Netcash

Netcash

2022A:18.8%

H12023:17.3%

2023E:17.3%2023E:14.0%-16.0%

2024E:17.0%

2022A:(8.2%)•SalesmomentumofJVbrands

H12023:24.1%•

Restructureofproprietarybrands

2024E:3.0%-5.0%

GeelyAutomobile

HoldingsLtd.

BBB-/Negative/--

<6%

<6%

<11%

Netcash

Netcash

2022A:3.2%

H12023:1.0%

2023E:3.3%

2024E:4.7%

2022A:7.9%•Volume,mixandcostcontroltooffsetrising

H12023:13.1%EVsales

2023E:9.0%-11.0%•Ratingtomoveintandumwithratingonthe

2024E:5.0%-7.0%parent

ZhejiangGeelyHoldingBBB-/Negative/--

GroupCo.Ltd.

2022A:2.5x

H12023:2.4x

2023E:2.3x

2024E:1.9x

2022A:22.4%

2023E:24.6%

2024E:34.4%

2022A:5.7%

2022A:4.7%•Volume,mix&pricetooffsetrisingEVsales

H12023:4.3%H12023:12.0%-16.0%

2023E:5.5%2023E:11.0%-13.0%

2024E:6.3%2024E:11.0%-13.0%

•

HighinvestmentinEVcoulddragfree

operatingcashflow(FOCF)

ContemporaryAmperexBBB+/Positive/--

TechnologyCoLtd.

Netcash

Netcash

2022A:13.7%

H12023:16.9%

2023E:17.1%

2024E:17.3%

•

•

EBITDAandOCFexpansiontocovercapex

Abilitytomaintaincompetitivepositioninthe

EVbatterymarket

JohnsonElectric

HoldingsLtd.

BBB/Stable/--

BBB-/Stable/--

Debt/EBITDA>1.5xMateriallydeteriorates

onasustainedbasis

2023A:0.6x

2024E:0.5x

2025E:0.3x

2023A:>60%

2024E:>60%

2025E:>60%

2023A:12.4%

2024E:13.1%

2025E:13.3%

•

•

Volumegrowthandcostcuttingtoimprove

margin

MaintainpositiveFOCFandkeeplowleverage

YanfengInternational

AutomotiveTechnology

Co.Ltd.

Debt/EBITDA>1.5x

<6%

2022A:1.8x

H12023;0.6x

2023E:1.4x

2024E:0.9x

2022A:53.2%

2024E:>60%

2025E:>60%

2022A:4.8%

H12023:6.8%

2023E:5.1%

2024E:5.3%

•

•

Stablecreditworthinessofitsparent-Huayu

Automotive

Workingcapitalmanagementandleverage

control

Notes:1)ZhejiangGeely'sEBITDAmarginiswithproportionateconsolidationofPolestarsince2022.2)BAICMotor’sdowngradetriggeristheparentcompanyBeijingAuto’smetric.3)GeelyAuto’sdowngradetriggeristheparentcompanyZhejiangGeely’s

metric.4)ThefinancialfiguresofJohnsonElectricrefertofiscalyearendingMarch31.5)YanfengInternational’sEBITDAmarginandthecorrespondingdownsidetriggeraretheparentcompanyHuayuAutomotiveSystemsCo.Ltd.’smetrics.FFO—Funds

fromoperations.Sources:Companyreports,S&PGlobalRatings.

10

ZhejiangGeelyHoldingGroupCo.Ltd.(BBB-/Negative/--)

Credithighlights

Keyoperationaldata

Keystrengths

Keyrisks

Salesvolume(leftscale)

YoYsalesvolumegrowth(rightscale)

YoYrevenuegrowth(rightscale)

EVpenetrationrate(rightscale)

3

Diversifiedgeographicalexposurewitha

wideproductportfolio.

Uncertaintiesintheexecutionofits

electrificationstrategy.

50%

30%

10%

-10%

2

1

0

GrowingEVpenetrationand

continuousmodelupgrades.

Increasingelectricvehiclesalesmay

continuetoweighonmarginandleverage.

SynergiesamongsubsidiariesontechnologyHighcapitalspendingkeepsfreeoperating

platformandjointprocurement.

cashflow(FOCF)negative.

2018

2019

2020

2021

2022

2023e

2024e

Downgradetriggers

Keyfinancials

EBITDAmargin

Debt/EBITDA

EBITDAmargindowngradetrigger

Debt/EBITDAdowngradetrigger

Capex(leftscale)

FOCF(leftscale)

(Capex+R&Dexpense)torevenue(rightscale)

10

0

16%

15%

14%

13%

12%

11%

12%

10%

8%

4

3

2

1

0

-10

-20

-30

6%

4%

-40

2018

2019

2020

2021

2022

2023e

2024e

2018

2019

2020

2021

2022

2023e

2024e

Note:1)ZhejiangGeely’sfinancialsareunderproportionateconsolidationofPolestarsince2022.2)EVpenetrationratereferstoEVsalesasapercentageoftheentity’stotalautosales.3)EV--Electriclightvehicleincludespureelectricandplug-inhybrid

electriclightvehicles.ZhejiangGeely'sdataalsoincludeshybridelectricvehicles.Capex--Capitalexpenditure.RMB—Chineserenminbi.e--Estimate.Sources:Companyreports,S&PGlobalRatings.

11

GeelyAutomobileHoldingsLtd.(BBB-/Negative/--)

Credithighlights

Keyoperationaldata

Keystrengths

Keyrisks

Salesvolume(leftscale)

YoYsalesvolumegrowth(rightscale)

YoYrevenuegrowth(rightscale)

EVpenetrationrate(rightscale)

1.8

LeadingproprietarybrandinChinawith

wideproductofferingsandgoodbrand

recognition.

Uncertaintiesintheexecutionofits

electrificationstrategy.

50%

1.2

0.6

0.0

30%

10%

-10%

Synergieswithsistercompanies(e.g.,VolvoIncreasingelectricvehiclepenetration

CarAB)ontechnologydevelopmentand

procurement.

pressurizingmargin.

Netcashposition.

Strongrelianceonasinglemarket.

2018

2019

2020

2021

2022

2023e

2024e

Revenueandmargintrend

Keyfinancials

Revenue(leftscale)

200

EBITDAmargin(rightscale)

Capex(leftscale)

12

FOCF(leftscale)

(Capex+R&Dexpense)torevenue(rightscale)

10%

12%

10%

8%

160

120

80

9%

8%

7%

6%

6

0

6%

40

4%

-6

0

2%

2018

2019

2020

2021

2022

2023e

2024e

2018

2019

2020

2021

2022

2023e

2024e

Note:1)GeelyAutomobileHoldingsLtd.isacoresubsidiaryofZhejiangGeelyHoldingGroup.Theratingisequalizedtotheratingontheparentcompany.Pleaserefertoslide10forthedownsidetriggersofbothGeelyAutomobileHoldingsLtd.andZhejiang

GeelyHoldingGroup.2)TheEVsalesvolumeandpenetrationrateof2023eisthecompany’starget.3)EVpenetrationratereferstoEVsalesasapercentageoftheentity’stotalautosales.4)EV--Electriclightvehicleincludespureelectricandplug-in

hybridelectriclightvehicles.e--Estimate.FOCF--Freeoperatingcashflow.Capex--Capitalexpenditure.Sources:Companyreports,S&PGlobalRatings.

12

BeijingAutomotiveGroupCo.Ltd.(BBB/Stable/--)

Credithighlights

Keyoperationaldata

Salesvolume(leftscale)

YoYsalesvolumegrowth(rightscale)

YoYrevenuegrowth(rightscale)

Keystrengths

Keyrisks

EVpenetrationrate(rightscale)

3

Solidpositioninthehigh-endpassenger

vehiclesandcommercialvehiclesmarket.

Pressureonprofitabilityduetointensifying

pricecompetitionandrisingelectrification.

20%

5%

2

1

StrongandstablealliancewithlargeglobalUncertaintiesinturningaroundloss-

originalequipmentmanufacturers(OEMs).

makingproprietarybrands.

-10%

-25%

Veryhighlikelihoodofextraordinary

supportfromtheBeijingmunicipal

government.

0

2018

2019

2020

2021

2022

2023e

2024e

Marginanddowngradetrigger

Keyfinancials

Capex(leftscale)

20

FOCF(leftscale)

(Capex+R&Dexpense)torevenue(rightscale)

FFO/debt

Downgradetrigger-FFO/Debt

EBITDAmargin

30%

25%

20%

15%

10%

14%

13%

12%

11%

10%

8.5%

10

0

8.0%

7.5%

7.0%

6.5%

-10

-20

2018

2019

2020

2021

2022

2023e

2024e

2018

2019

2020

2021

2022

2023e

2024e

Note:1)EVpenetrationratereferstoEVsalesasapercentageoftheentity’stotalautosales.2021and2022penetrationratesarebasedonourestimate.2)EV--Electriclightvehicleincludespureelectricandplug-inhybridelectriclightvehicles.e-

Estimate.FFO--Fundsfromoperations.FOCF--Freeoperatingcashflow.Capex--Capitalexpenditure.RMB—Chineserenminbi.Sources:Companyreports,EVVolumes,S&PGlobalRatings.

13

ContemporaryAmperexTechnologyCo.Ltd.(BBB+/Positive/--)

Credithighlights

Keyoperationaldata

Salesvolume-energystorage(leftscale)

BatterysalesvolumeYoYgrowth(rightscale)

YoYrevenuegrowth(rightscale)

Salesvolume-Li-ionbattery(leftscale)

BatteryASPYoYgrowth(rightscale)

Keystrengths

Keyrisks

LeadingmarketpositionintheglobalEV

batteryindustry.

Moderatingrevenuegrowthgiven

deceleratingEVsalesgrowthinChina.

700

600

500

400

300

200

100

0

300%

250%

200%

150%

100%

50%

Strongcustomerrelationshipswithmajor

automakers.

Intensifyingcompetitioncouldthreaten

marketshareandconstrainmargin

improvement.

Sustainednetcashpositionwithpositive

freecashflowgeneration.

Uncertaintyinoverseasexpansionsamid

geopoliticaltensions.

0%

-50%

2018

2019

2020

2021

2022

2023e

2024e

Downsidetriggers

Keyfinancials

EBITDAmargin

Debt/EBITDA

EBITDAmargindownsidetrigger

Capex(leftscale)

80

FOCF(leftscale)

(Capex+R&Dexpense)torevenue(rightscale)

50%

Debt/EBITDAdownsidetrigger

30%

2.0

40%

30%

20%

10%

0%

25%

20%

15%

10%

1.5

1.0

0.5

0.0

40

0

-40

-80

2018

2019

2020

2021

2022

2023e

2024e

2018

2019

2020

2021

2022

2023e

2024e

e--Estimate.ASP--Averagesellingprice.Capex–Capitalexpenditure.FOCF--Freeoperatingcashflow.RMB--Chineserenminbi.GWh--Gigawatthours.Sources:Companyreports,S&PGlobalRatings.

14

JohnsonElectricHoldingsLtd.(BBB/Stable/--)

Credithighlights

Steadyrevenuetrend

Totalrevenue

China

Asia(excludingPRC)

Europe

Others

Keystrengths

Keyrisks

NorthAmerica

TotalrevenueYoYgrowth

Solidmarketpositioninseveralautoparts

segments.

Highinflationrestrainingmarginstobelow

pre-pandemiclevels.

4

3

2

1

0

10%

0%

Diversifiedcustomerbasewithevenly

distributedgeographicalexposure.

U.S.dollarappreciationmayleadtoforeign

exchangelossesandslowprofitability

recovery.

Lowfinancialleverageonprudentfinancial

management.

-10%

2019

2020

2021

2022

2023

2024e

2025e

Marginanddowngradetrigger

Keyfinancials

Debt/EBITDA

Downgradetrigger-Debt/EBITDA

EBITDAmargin

18%

Capex(leftscale)

300

FOCF(leftscale)

(Capex+R&Dexpense)torevenue(rightscale)

21%

2.0

1.5

1.0

0.5

0.0

150

0

18%

15%

12%

9%

16%

14%

12%

10%

-150

-300

-450

2019

6%

2019

2020

2021

2022

2023e

2024e

2025e

2020

2021

2022

2023

2024e

2025e

Note:FiscalyearendingMarch31.e--Estimate.Capex--CapitalExpenditure.FOCF--Freeoperatingcashflow.Sources:Companyreports,S&PGlobalRatings.

15

RelatedResearch

Commentary

•GlobalAutoSalesForecasts:ThePricingPartyIsComingToAnEnd,Oct09,2023

•AsianBatteryMakersAreShiftingStrategiesToHoldOntoGlobalLead,Oct05,2023

•GlimmersOfWinnersEmergeInAsia'sEVPush,May15,2023

•GlobalAutoSalesForecasts:MacroRisksDemandPricingAndProductionDiscipline,Apr18,2023

TearSheet&RatingActions

•TearSheet:ZhejiangGeelyHoldingGroupCo.Ltd.,Sep06,2023

•TearSheet:GeelyAutomobileHoldingsLtd.,Sep06,2023

•TearSheet:BeijingAutomotiveGroupCo.Ltd.,Sep05,2023

•TearSheet:BAICMotorCorp.Ltd.,Sep04,2023

•TearSheet:ContemporaryAmperexTechnologyCo.Ltd.,Jul31,2023

•ContemporaryAmperexTechnologyOutlookRevisedToPositiveOnRisingBusinessOpportunities;'BBB+'RatingAffirmed,Apr24,2023

•BAICMotor'sMarginWillRiseModestlyIn2023,Mar27,2023

•GeelyAutoFacesUphillPathToMarginRecovery,Mar23,2023

•ChinaAutoManufacturerZhejiangGeelyHoldingAndSubsidiaryGeelyAutoOutlooksRevisedtoNegativeOnMarginPressure,Nov22,2022

16

17

AnalyticalContacts

ClaireYuan

Director

StephenChan

DannyHuang

SeniorDirector

AssociateDirector

+8522533-3542

claire.yuan@

+8522532-8088

+8522532-8078

stephen.chan@

danny.huang@

TorisaTan

BoyangGao

CrystalLing

RhettWang

Associate

Associate

Associate

RatingAnalyst

+862131830642

+861065692725

+8522533-3586

+861065692730

torisa.tan@

boyang.gao@

crystal.ling@

rhett.wang@

18

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