HK Stock Market Move | Guangzhou Automobile Group (02238) fell more than 4%. Morgan Stanley stated that the recent positive news of the company will have limited short-term substantive contributions. Currently, the company's valuation is still underestimated.

Guangzhou Automobile Group (02238) fell more than 4%, after closing up more than 16% at the end of last Friday. As of the time of writing, it dropped 4.35%, to 3.96 Hong Kong dollars, with a trading volume of 272 million Hong Kong dollars. Morgan Stanley released a research report stating that Guangzhou Automobile Group had risen 10.4% in the intraday last Friday, with a cumulative increase of 24% in the past week. Morgan Stanley believes that this recent rise is mainly due to three recent positive factors, including the management's latest statement that they will mass produce vehicles equipped with solid-state batteries by 2026; significantly increasing information disclosure about the brand Qijing, which is cooperated with Huawei; and announcing marketing cooperation with JD-SW. Although these three measures still need time to be fully effective and have limited short-term contributions to profit, considering the latest business progress and Guangzhou Automobile Group's 5.7% market share so far this year, the current valuation is still undervalued. Morgan Stanley pointed out that although Aion, a brand under Guangzhou Automobile Group, is still in deficit, Guangzhou Toyota's strategy to transition to new energy sources by 2025 has shown results and is expected to spread to other joint venture brands within the company. Therefore, once the company announces new business plans in the future or there is a significant inflow of funds from the south, with the support of continued improvement in the fundamentals, the stock price is expected to have a significant response.