Investment Banker BofA Securities Issues Double Upgrades on Two Companies – SAIC Motor and Eve Energy
In a surprise move, investment bank BofA Securities has issued double upgrades on two Chinese companies: electric vehicle maker SAIC Motor and lithium-ion battery manufacturer Eve Energy. The upgrade is significant as it marks a shift in sentiment towards the two companies following stronger earnings forecasts, shipment growth, and valuation accretion.
SAIC Motor Upgrade Reflects Strong Electric Vehicle Sales
For SAIC Motor, BofA Securities has raised its price objective to RMB27 from RMB15.3, while shares closed at RMB18.93 on August 29th. The upgrade reflects the expected impact of Shangjie, a new electric vehicle brand developed in partnership with Huawei. Shangjie’s first model, the H5 SUV, has been a huge success, with more than 50,000 refundable orders booked in just one day following its launch on August 25th.
Shangjie Expected to Drive SAIC Motor Sales Growth
BofA Securities projects that Shangjie will drive significant sales growth for SAIC Motor, with expected volumes of 60,000 units in 2025, 260,000 units in 2026, and 550,000 units in 2027. This is compared to groupwide volume forecasts of 4.61 million vehicles, 4.93 million vehicles, and 5.33 million vehicles for the same years.
BofA Securities Upgrades SAIC Motor Due to Valuation Accretion
The upgrade by BofA Securities reflects its belief that SAIC Motor’s valuation is undervalued given the expected impact of Shangjie on sales growth. The brokerage applied a 0.7x price-to-book multiple to legacy operations and 1.3x price-to-sales for Shangjie’s contribution, resulting in a price objective of RMB27.
Expected Earnings Growth for SAIC Motor
BofA Securities expects significant earnings growth for SAIC Motor, with forecasted earnings per share (EPS) of RMB0.87 in 2025, rising to RMB0.69 and RMB0.70 in 2026 and 2027, respectively. This is compared to EPS of RMB0.14 in 2024. The company’s gross margin is expected to remain steady at around 10% for the next three years.
Eve Energy Upgrade Driven by Strong Sales Growth
For Eve Energy, BofA Securities has raised its price objective to RMB70 from RMB37, while shares were last trading at RMB53.25. The upgrade reflects the expected impact of increasing production utilization and stronger sales growth in the energy storage business.
Eve Energy Expected to Benefit from Battery Sales Growth
BofA Securities projects that Eve Energy will benefit significantly from the growing demand for electric vehicles (EVs) and renewable energy storage systems. The company’s third-party customers, including BMW and Mercedes, are expected to drive strong sales growth in 2025-2027.
Eve Energy Expected to Achieve Strong Earnings Growth
BofA Securities expects significant earnings growth for Eve Energy, with forecasted EPS of RMB1.91 in 2025 rising to RMB2.94 and RMB3.78 in 2026 and 2027, respectively. This is compared to EPS of RMB1.49 in 2024. The company’s gross margin is expected to remain steady at around 17% for the next three years.
Eve Energy Expected to Achieve Strong Sales Growth
BofA Securities projects that Eve Energy will achieve strong sales growth, with forecasted revenues of RMB63.7 billion in 2025 rising to RMB76.7 billion and RMB91.5 billion in 2026 and 2027, respectively.
Key Details of BofA Securities’ Upgrade
BofA Securities applied a valuation multiple of 27.9x for Eve Energy, with an expected dividend yield of 0.9% in 2025 rising to 1.4% in 2026 and 1.8% in 2027.
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Conclusion
In conclusion, BofA Securities’ decision to upgrade SAIC Motor and Eve Energy reflects its confidence in their long-term prospects. SAIC Motor’s Shangjie brand is expected to drive significant sales growth, while Eve Energy’s focus on battery manufacturing will benefit from strong demand for EVs and renewable energy storage systems.