Goldman maintains auto neutral rating of $36

Beijing Time July 29 Evening News, Goldman Sachs released a study today to maintain a "neutral" rating on auto (nyse:athm) shares, as well as a 36 dollar target share price.

The following is the full report:

Message

Guangzhou auto Toyota recently launched the latest car Leiling by Auto's electric dealer service "Car Mall", which was released at the 2014 Auto Show in Beijing. The programme lasts about 1 months and will end on August 31.

Significance

Similar to previous electrical business activities, auto to each car buyers charged 499 yuan fee, and these buyers will be eligible for pre-sale. Users will then receive vouchers from auto to buy a new Leiling car from a nearby designated 4S store. The project covers more than 30 provinces and autonomous regions. At the end of the campaign, auto will encourage users to submit their shopping experience feedback and provide free refueling cards (worth 1000 RMB per transaction) to users who publish high-quality reviews.

Auto and its rival's easy-car network are exploring new business models to drive demand for electricity. Similar to SouFun's performance in the real estate vertical market, auto is trying to turn current content and traffic advantages into trading volumes. May 5, auto in the first quarter earnings conference call, reported that April 15 's promotional activities attracted strong demand. We believe that the latest activities will promote the expansion of the electric business. We will wait and see further operational and financial details to quantify this positive impact.

Valuation

We keep the 36-dollar 18-month target stock unchanged. This is based on a market-growth ratio (PEG) of 0.8 times times, 2014-2017-year profit of the annual composite growth rate of 32%.

Main risk

Car sales growth, dealer network expansion of the executive power. (D-Gold)