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2016 All-Asia Research Team: Autos & Auto Parts, No. 1: Jack (Yuhin) Yeung & team
For a second straight year, Jack (Yuhin) Yeung guides his Morgan Stanley team to first place.
Total Appearances: 10
Team Debut: 2005
For a second straight year,Jack (Yuhin) Yeungguides his Morgan Stanley team to first place. The five analysts report on more than 50 Asia ex-Japan autos and auto parts names, winning praise for their insight into both companies and the sector, their timely and in-depth analyses and their valuable client service, including arranging corporate access and auto show trips. Investors specifically cite the group’s shift on Great Wall Motor Co. as an outstanding call from the past year, noting that Yeung and his crew were the first on the Street to downgrade China’s leading sport-utility vehicle maker. In June they lowered their rating on its Hong Kong–traded stock from a long-held overweight to neutral — “on the back of monthly dealer channel checks that showed the inventory of its best-selling H6 had been rising rapidly,” one fund manager recalls — and forecast that margin improvement would fail to meet expectations. The shares were then trading at a split-adjusted HK$15.79, having rocketed 71.4 percent during the trailing 12 months, while the regional sector slumped 16.1 percent. Within two weeks management cut prices on a range of vehicles, include the popular Haval H6 SUV crossover, then in July announced plans to tap the market for 12 billion yuan ($2.7 billion) to fund increased production. By September, when the researchers reversed course and raised their rating back to outperform — thanks largely to a rebound in sales and expectations of support from forthcoming model launches — the stock had plunged 60.2 percent, falling below their target price to settle at HK$6.29 and trailing its peers by 47.5 percentage points. The company abandoned its fundraising scheme in March, after the Shanghai-listed shares fell below the minimum offer price, and in Hong Kong, Great Wall closed at HK$6.20 in late April. Its 1.4 percent slip since the team’s upgrade compared with an 11.4 percent advance for the regional sector. Morgan Stanley’s price objective is HK$10. In general, the squad sees promise on the horizon for some players in the form of policy stimulus and an uptick in market demand. “We look for mid-to-high single-digit industry growth for the upcoming year,” says Yeung, 33. “Given intensifying competition, only select names could outperform. We prefer [joint venture] brands that enjoy a strong and differentiated value proposition in China. Increasing localization also helps to back their profitability.”