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Auto & Transport Roundup: Market Talk

30 Jul 2018 8:20 am

The latest Market Talks covering the Auto and Transport sector. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

0809 GMT - China is expected to release draft rules with stricter requirements for investments in so-called new-energy vehicles, but they won't impact supply-demand for vehicles or batteries, says Tian Miao at Everbright Sun Hung Kai Financial Research. "The policy is aimed at accelerating consolidation of the sector and eliminate outdated capacity." Auto makers in the country can make 20 million NEVs/year right now, but that's quadruple anticipated 2020 output, the firm notes. China's 1H sales more than doubled to 412,000 units. (biman.mukherji@wsj.com)

0722 GMT - China Railway's reported intention to spend more than CNY100 billion ($14.7 billion) the next 3 years to grow freight capacity "greatly exceeds" what Daiwa anticipated and is obvious good news for equipment makers. The investment bank estimates more buys of locomotives and freight wagons would boost CRRC's revenue 6-8% through 2019 and an estimated 13-16% next year for Zhuzhou CRRC. Daiwa has been bullish on both, and CRRC has jumped 4.7% today in Hong Kong, reducing the year's drop to 18%. Zhuzhou is 2.9% higher, cutting its decline to 7.8%. For its part, China Railway is 1.2% higher in Hong Kong, hitting fresh 14-month bests. (john.wu@wsj.com)

0354 GMT - Chinese stocks that will benefit from Beijing's newly pledged fiscal-stimulus program are providing cushion after a week morning for equities there. The benchmark Shanghai Composite entered the midday break with a 0.2% drop, but a 50-company subindex that concentrates on the largest, mostly state-run, blue chips rose 0.3%. Anhui Conch Cement gained 4.3% to hit fresh record highs while China State Construction Engineering climbed 2.1%. Meanwhile, some firms related to the country's high-speed railway network, especially some less-heard-of equipment makers, rose the 10% daily limit. (hong.shen@wsj.com)

0146 GMT - Orient Overseas trading has been halted to start the week as the company's takeover process moves on. The US$6.3 billion deal with Chinese rival Cosco Shipping got 98.4% acceptance from Orient shareholders. In order to keep the company's stock listing, Cosco is selling a 15% stake. Meanwhile, Bocom lowers Orient's earnings forecast, now predicting a 25% drop in 2018 EPS. "The unsettled US-China trade feud remains an overarching concern" for the company, the bank adds. Orient plans to resume trading on or around Aug. 17. (joanne.chiu@wsj.com; @joannechiuhk)

0014 GMT - GUD isn't cooling its auto-sector M&A, with management amid its FY report signaling more bolt-on purchases in the sector as it benefits from tailwinds that include vehicle owners requiring more-expensive parts. Citi estimates GUD could fully fund deals worth up to A$90 million ($66.6 million) before reaching the upper end of its net debt/Ebitda target range of 1.8-2.0 for the new FY. "A A$90 million acquisition at an enterprise value/Ebit multiple of 6.5 times represents 11% upside to our FY19 net-profit forecast of A$66 million," the bull says. This past year's earnings were A$101.8 million. (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires

July 30, 2018 04:20 ET (08:20 GMT)

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