UBS: Guangzhou Automobile Group's (02238) profitability expected to remain under pressure. Neutral rating.

UBS released a research report stating that Guangzhou Automobile Group (02238) recorded a net loss of 656 million yuan in the first quarter of 2026, a decrease of 10% year-on-year, and a significant decrease of 85% on a quarterly basis. However, excluding a one-time item of 728 million yuan, the adjusted net loss is around 1.4 billion yuan, an increase of 89% year-on-year. The stock is rated as "neutral" with a target price of 3.6 Hong Kong dollars. The report points out that although Guangzhou Automobile Group's sales of its own brands have shown some improvement on a monthly basis, the average selling price and gross profit margin continue to decline, leading to an expanded loss, which is still disappointing. The bank believes that amid fierce domestic competition for its own brands and the weak growth of joint venture brands, the company's profitability is expected to continue to be under pressure.