The analyst rating for GAC GROUP (02238.HK) is primarily influenced by the company's projected significant net loss for 2025, estimated to be between RMB8 billion and RMB9 billion, which is substantially worse than BofA Securities' expectation of RMB3.9 billion. Additionally, the core net loss, excluding one-off items, is projected to be between RMB8.9 billion and RMB9.9 billion, indicating a drastic decline in profitability compared to the previous year. The intense competition in the market is expected to continue compressing profit margins for the Group's proprietary brand, leading to a forecast of thin profitability for 2026 and 2027. As a result, UBS has maintained a Neutral rating with a target price of $4.2, while also keeping an Underperform rating on both GAC GROUP's H- and A-shares, with target prices set at $3.1 and RMB5.9, respectively.
