SAIC’s own-brand overseas sales rise sixty percent: why does Deutsche Bank still rate it Hold?
In August, SAIC’s own-brand overseas sales rose 62% year on year but fell 3.1% month on month, with performance varying across models and regions. Deutsche Bank expects the improvement in the overseas business to support own-brand gross margins, while forecasting pressure on investment income from joint ventures, and maintains its Hold rating.
Original source：Deutsche BankFirst published on Unhidea：Original source date：
Key takeaway
Higher overseas volumes are improving the profitability of SAIC’s own brands through scale and product mix, but declining investment income from joint ventures leaves two opposing forces shaping the group’s profit outlook.
How fast are overseas sales growing, and what changed in August?
In August 2026, SAIC Motor sold 139,207 vehicles overseas, up 57.7% year on year and down 1.7% month on month. Sales for the first eight months totalled 1,015,539 vehicles, up 52.8% year on year. The overseas business continued to expand year on year, but sales in August fell from July.
Excluding SAIC Volkswagen and SAIC-GM, overseas sales of own brands in August were 97,205 vehicles, up 62.0% year on year and down 3.1% month on month. Sales for the first eight months totalled 725,174 vehicles, up 65.5% year on year. The cumulative growth rate for own brands exceeded that of the group as a whole, although their single-month decline was also larger.
Which models and markets are supporting growth?
Growth across models was uneven. In August, overseas sales of the MG HS reached 13,808 vehicles, up 83% year on year; Mulan sales were 10,515, up 2535% year on year and 53% month on month. By contrast, the higher-volume MG ZS sold 18,088 vehicles, up only 7% year on year and down 14% month on month; the MG 3 sold 8,991 vehicles, down 8% year on year. Behind the strong growth in total volume, the contributions of individual models are diverging.
UK sales in August were 5,494 vehicles, up 88.7% year on year but down 28.6% month on month; cumulative sales for the first eight months rose 20.7% year on year. Mexico sold 3,653 vehicles in August, down 11.8% year on year, while cumulative sales for the first eight months still rose 11.3%, making the single month weaker than the cumulative trend.
Australia and Thailand both recorded year-on-year and month-on-month growth: in August, they sold 4,767 and 4,234 vehicles respectively, up 21.4% and 55.3% year on year and 11.3% and 38.0% month on month, respectively. The group’s month-on-month overseas decline therefore did not reflect simultaneous weakness across all markets.
How do higher overseas volumes improve profitability, and what offsets the gains?
Deutsche Bank believes own-brand gross margins are improving through two channels: greater sales volume lowers per-vehicle costs, and higher sales from the high-margin overseas business improve the product mix. The value of overseas growth therefore lies not only in selling more cars, but also in improving the quality of earnings from the own-brand business.
However, in the past almost all of SAIC’s net profit came from investment income generated by joint ventures with global automakers and parts companies, while its own-brand business previously incurred substantial losses. Deutsche Bank expects investment income to decline gradually as joint ventures increase their exposure to loss-making new energy vehicle businesses and competition from Chinese own brands squeezes sales.
The improvement in group profit therefore depends on the balance between two forces: how much higher own-brand gross margins contribute and how far joint-venture earnings decline. Industry price competition will weigh on the performance of the own-brand new energy vehicle business, while the relatively weak supply of new products from joint ventures could also drag on their margins.
What growth expectations are embedded in the target price under the Hold rating?
Deutsche Bank maintains its Hold rating and a 12-month target price of 14.50 yuan. The target price uses a five-year discounted cash flow model, with a weighted average cost of capital of 7.5% and a perpetual growth rate of 0.5%.
The target price implies a 2026 estimated price-to-earnings ratio of 14.8 times, above SAIC’s historical average forward 12-month price-to-earnings ratio of 9.0 times. Deutsche Bank attributes the premium to the rising share of new energy vehicles and exports in the business; faster export growth driven by new smart electric vehicles for overseas markets is one of its listed upside scenarios.
