Bank of America Securities issued a research report stating that it has lowered its revenue forecasts for BAIC MOTOR (01958) from this year through 2027 by 3% to 4%, reduced gross margin forecasts by 0.5 to 1.1 percentage points, and cut profit forecasts by 12% to 27%. The target price has been reduced from HK$2.1 to HK$2.0, while reaffirming the underperform rating.

BAIC MOTOR's second quarter revenue declined 16% year-over-year to RMB 40 billion, with the second quarter net EBIT margin at negative 1.2%, falling 7.1 percentage points compared to the same period last year. The firm estimates that BAIC Mercedes' quarterly net profit dropped 43% year-over-year, primarily due to an 18% decline in sales volume year-over-year.

The company reported a quarterly net loss of RMB 569 million, compared to a net profit of RMB 943 million in the same period last year. For the first half of the year in total, sales fell 13% year-over-year to RMB 82.4 billion. The gross margin declined 4.2 percentage points to 14.5%, while equity investment losses amounted to RMB 34 million, an improvement from the RMB 504 million loss in the same period last year. Half-year net profit dropped 82% year-over-year to RMB 360 million, representing 16% of the firm's full-year forecast.