In third place, slipping from first, is UBS’s Yankun Hou, who nonetheless earns investors’ admiration for the frequency of his reporting updates and the quality of his coverage. The researcher maintains a positive stance on his sector, seeing promise over the next 12 months, he says. “Sales growth will be slightly moderate but remain [at about] 10 percent year on year,” he adds, “backed by strong demand from inland regions and lower-tier cities.” Among his favorite names is Shanghai-based Baoxin Auto Group. Hou issued a buy recommendation on the shares in mid-February, reasoning that the luxury and ultraluxury dealership operator’s after-sales service business was sufficiently substantial to cover most earnings expenses, helping to offset volatility in car sales. Although the stock began to slip soon after he advised buying, he was confident that the market was overreacting to weak BMW sales in China early in the year. Accordingly, in late May, with the shares down 30 percent since February, he reiterated his position. Boaxin’s shares then rebounded 37.3 percent, to close October at HK$7.99, down just 4 percent over the life of the call. “Yankun offers a lot of industry insight,” attests one money manager. “He has the best network within the dealerships.” — Katie Gilbert RUNNER(S)-UP Ming Xu UBS |
The 2013 All-China Research Team: Autos & Auto Parts, Third: Yankun Hou