Citi analysts Itay Michaeli and Justin Barell assured they are not panicking over General Motors Company GM, even though China remains a substantial risk, and explain why in a recent report.
Citi’s Take
While the firm sees some added risk to auto production in China following the recent market turmoil, its view of the wider sector has not changed materially, “After speaking with suppliers and assessing mid-August U.S. trends.”
In fact, Citi’s conviction that General Motors will outperform Ford Motor Company F has actually increased with the recent release of F-150 data points.
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Why Citi Is Not Panicking
The analysts acknowledged, of course, that China remains high risk-to-results. However, four elements keep them from panicking:
The report continued, "Also, a major General Motors–China JV, SGM Wuling, operates rising local brands such as Baojun, which was +400 percent in July contributing to an overall up month for the JV (vs. a down July for Ford against an up Q3 production guide...overlooked risk?) Ex. SGMW, GM’s China profit exposure is actually similar to Ford’s,” the experts expounded.
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