GAC GROUP (02238) fell more than 4%, following a surge of over 16% at the close last Friday. As of press time, the stock was down 4.35% to HK$3.96, with a trading volume of HK$272 million. Morgan Stanley noted in a research report that GAC GROUP had risen 10.4% intraday last Friday and gained 24% over the past week. The bank attributed the rally to three recent positive developments: management's announcement of plans to mass-produce vehicles equipped with all-solid-state batteries by 2026; significantly increased disclosures about its Qijing brand collaboration with Huawei; and a marketing partnership announcement with JD.com-SW. While these initiatives may take time to scale and their near-term earnings impact is limited, Morgan Stanley believes the stock remains undervalued, considering GAC's latest business progress and its maintained 5.7% market share year-to-date. The report highlighted that although GAC's Aion brand is still loss-making, its joint venture GAC Toyota's strategy to transition to new energy vehicles by 2025 has shown early success, with potential spillover effects to other joint ventures. Morgan Stanley suggested that any future announcements of new business plans or catalysts such as significant southbound capital inflows could trigger a strong stock price reaction, supported by continued fundamental improvements.
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