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Brilliance China Automotive Holdings Ltd 01114

Rating as of

Morningstar’s Analysis

Currency in HKD

Economic Moat


Capital Allocation


Unauthorized Guarantees and Missing Cash Knock FVE Back by 15%; Uncertainty Jumps to Extreme

Ivan Su Senior Equity Analyst

Analyst Note

| Ivan Su |

Brilliance China’s governance failure leading to subsidiary SJAI’s unauthorized guarantees and missing cash is highly disappointing. Brilliance’s potential cash loss of CNY 6.8 billion knocks 15% off of our fair value estimate to HKD 10.10. While the pre-suspension share price is already below our fair value estimate, we think it is too early to be confident in the full extent of the firm’s governance issues. As a result, we raise our uncertainty rating to extreme and advise that investors sit on the sidelines for the time being. Given the bankruptcy of parent Huachen, we think the story is still unfolding and a change in major shareholders or other restructure is much needed. We intend to keep our extreme uncertainty rating until there is a known long-term fix to these issues.  

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Company Profile

Business Description

Based in Liaoning, China, Brilliance Auto is a provincial state-owned enterprise that manufactures passenger vehicles (PV), minivans, and automotive components. The majority of Brilliance’s revenue and all its operating profits come from a PV joint venture with BMW. The firm operates its minivan business through a 51%-owned joint venture with Renault.

8 Connaught Road Central, Suites 1602-05, Chater House
Hong Kong, Hong Kong
T +852 25237227
Sector Consumer Cyclical
Industry Auto Manufacturers
Most Recent Earnings Jun 30, 2006
Fiscal Year End Dec 31, 2020
Stock Type
Employees 5,390

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