Huayu Automotive Systems:Data Update,Updating model post 2Q2016results
Changes and Implications
We have updated our quarterly estimates and made minor changes (+1%p.a.) to 2016E-18E EPS estimates to incorporate actual 2Q2016 results. Wedo not view these changes as material, and there is no change to ourinvestment thesis, rating or price target.
We have a Neutral rating on Huayu (600741.SS). Our P/B-ROE-based 12-month price target is Rmb17.11. Key risks: Higher/slower than expectationcost optimization of interior/exterior business; worse/better than expectedsynergy effect; higher/slower ADAS progress; higher/lower China carmarket growth/pricing.