Macquarie reports that it maintains its outperformance rating of 01148.HK, which makes N20 engines for BMW, which is expected to sell 37000 units this year (up from 9300 last year), tripling its revenue to 1.4 billion yuan a year, and accounting for 48% of its revenue, up from 17% last year. However, as BMW's strong engine revenue was offset by weak sales of its own-brand engines, the bank cut its 2015-16 earnings forecast by 31 per cent to 32 per cent, with a corresponding target price of 2.80 yuan.

The bank expects sales of its own-brand engines to fall 22% year-on-year this year and flat next year, mainly supported by the popularity of new SUV models from 01114.HK, a major domestic customer. The Group is currently a part of BMW engine supplier in China and believes that it has great potential to become a global BMW engine supplier in the future.