| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 29.62 | 166 |
| Intrinsic value (DCF) | 9.17 | -18 |
| Graham-Dodd Method | 6.05 | -46 |
| Graham Formula | 10.03 | -10 |
Chongqing Changan Automobile Company Limited stands as one of China's oldest and most established automotive manufacturers, tracing its origins back to 1862. Headquartered in Chongqing, this state-owned enterprise has evolved into a comprehensive automotive group with a diverse portfolio spanning traditional internal combustion engine vehicles and new energy vehicles (NEVs). The company manufactures and sells a wide range of automobiles, including passenger cars, sedans, MPVs, SUVs, and cross-passenger vehicles under multiple brands such as Changan SHENLAN, Changan, Oshan, Kaicene, Avatr, and Changan UNI. It also maintains significant joint ventures with global giants like Ford and Mazda. Beyond manufacturing, Changan Auto has expanded into adjacent services, including mobility solutions, car services, battery swapping, and auto finance, positioning itself as a full-spectrum mobility provider. Operating primarily within the massive Chinese automotive market, the company is a key player in the Consumer Cyclical sector, actively participating in the industry's pivotal shift towards electrification and intelligent connected vehicles (ICVs).
Changan Automobile presents a compelling but nuanced investment case. The company benefits from its strong market position in China, a diversified brand portfolio covering both legacy and new energy segments, and valuable joint venture partnerships. Financially, it generated substantial revenue of nearly CNY 160 billion for the period, with a net income of CNY 7.32 billion, indicating profitability. A dividend per share of CNY 0.295 offers income appeal. However, significant risks temper attractiveness. The Chinese auto market is intensely competitive, especially in the NEV space, putting pressure on margins. A beta of 1.4 suggests higher volatility than the broader market, reflecting sensitivity to economic cycles and competitive dynamics. While the company has a strong cash position, capital expenditures were high (CNY -4.87 billion), indicative of the heavy investments required to stay competitive in the EV transition. The investment thesis hinges on Changan's ability to successfully execute its NEV strategy and gain market share against formidable domestic rivals.
Changan Automobile operates in the hyper-competitive Chinese automotive landscape, where its competitive positioning is a blend of traditional strengths and emerging challenges. Its primary advantage lies in its long-standing history, extensive manufacturing experience, and well-established sales and service network across China. The joint ventures with Ford and Mazda provide access to international technology, branding, and revenue streams, though these partnerships face headwinds as foreign brands lose share in China. Changan's multi-brand strategy allows it to target different consumer segments, from affordable models under the main Changan brand to premium electric vehicles under the Avatr and SHENLAN banners. However, its competitive advantage in the critical NEV segment is still being solidified. While companies like BYD have achieved overwhelming scale and vertical integration in EVs, and new entrants like NIO and Li Auto have built strong brand loyalty, Changan is playing catch-up. Its strategy involves leveraging its manufacturing prowess and partnering with technology firms (e.g., Huawei with Avatr) to accelerate innovation. The company's scale provides cost advantages, but it must contend with price wars initiated by larger competitors. Ultimately, Changan's position is that of a formidable incumbent adapting to a disruptive market, with its success dependent on the execution and consumer acceptance of its new energy brands faster than the decline of its traditional ICE business.