China Automotive Systems initiated with "buy"

07/01/08 - Global Hunter Securities

NEW YORK, July 1 (newratings.com) - Analyst Ping Luo of Global Hunter Securities initiates coverage of China Automotive Systems Inc (CAAS) with a "buy" rating. The 12-month target price is set to $9.

In a research note published this morning, the analyst mentions that the company has robust supply agreements with top domestic OEMs and is poised to witness growth going forward, aided by market share expansion of domestic auto manufacturers in China. China Automotive Systems’ purchase of a 35.5% equity interest in the Henglong subsidiary would enable the company to expand its net margins from 6.6% in 2007 to 10% in 2008, the analyst adds. The company is likely to generate top-line growth of 30% in the forthcoming two years, driven by a rise in domestic sales and exports, Global Hunter Securities says.