SAIC Motor stock rating upgraded by BofA on Huawei partnership potential

BofA Securities has upgraded SAIC Motor Corp Ltd. (SS:600104) to Buy from Underperform, significantly raising its price target to RMB27.00 from RMB15.30. This upgrade is primarily driven by strong sales expectations for SAIC's new electric vehicle brand Shangjie, a joint venture with Huawei, alongside anticipated stabilization of its Volkswagen and General Motors joint ventures by 2026. BofA also increased SAIC's volume sales forecasts for 2025-2027, reflecting the new brand's potential, and adopted a sum-of-the-parts valuation method.

Analysis

BofA Securities has issued a significant upgrade for SAIC Motor Corp Ltd. (600104), raising its rating to Buy from Underperform and increasing the price target by 76% to RMB27.00 from RMB15.30. The primary catalyst for this revision is the high expectation for SAIC's new electric vehicle brand, Shangjie, a joint venture with technology giant Huawei, which BofA projects will achieve strong sales volumes. This optimism is quantified by upward revisions to SAIC's volume sales forecasts by 1% for 2025, 5% for 2026, and 10% for 2027. A secondary factor is the anticipated stabilization of the company's legacy joint ventures with Volkswagen and General Motors by 2026. Critically, BofA has shifted its valuation methodology to a sum-of-the-parts (SOTP) model, which separates the valuation of the legacy business (at a 0.7x price-to-book ratio) from the new Shangjie venture (at a 1.3x price-to-sales ratio on 2026 estimates), effectively assigning a growth multiple to the EV-Huawei partnership and unlocking substantial perceived value.

Key Decisions for Investors

• Given the magnitude of the upgrade and price target hike, investors should re-evaluate SAIC as a potential turnaround story, where the Huawei partnership for the Shangjie EV brand could serve as a major value-unlocking catalyst.
• The investment thesis now hinges on execution; closely monitor the initial sales data, production ramp-up, and consumer reception of the Shangjie brand, as these will be the primary drivers validating BofA's SOTP valuation.
• Investors should consider the risk profile of the legacy JV business, which is expected to stabilize but not until 2026, and weigh it against the high-growth, higher-risk potential of the new EV venture.