【行业研究报告】永达汽车-After-sales as earnings driver amid low valuation

InitiatewithBUY.WeinitiatecoverageofYongdawithaBUYratingandatarget
priceofHK$8.50,basedon7xFY23EP/E.Despitedirect-salesattemptsby
somenew-energy-vehicle(NEV)makers,webelievedealershipbusinessmodel
isstilljustified.Webelievethemajorityofshort-termnegativeshasbeenpriced
ingivenitslowvaluationnow.Someinvestorsmayunderestimatethe
contributionofafter-salesservicerecoverytoYongda’snetprofitgrowththisyear.
Industrymargindenthasbeenlargelypricedin.Autodealers’new-car
salesbusinessmayfacechallengesamidpricewarin1Q23,followingphase-
salesbusinessmayfacechallengesamidpricewarin1Q23,followingphase-
outofbothNEVsubsidyandpurchase-taxbenefitfromthisyear.Weexpect
salesvolumeandmarginstorecoverfrom2H23afterpossibleinventory
reductionin2Q23.Yongda’scorebrands,BMWandPorsche,couldbebetter
positionedthanothertraditionalbrandsintheNEVworld.
NEVbrandsandpre-ownedvehiclesmaygrowfast.Yongdaisapioneer
inpartneringwithNEVmakers.WeexpectYongda’snew-carsalesvolumeof
NEVbrandstosurgeover90%YoYto15,000units(dealershipmodeland
agencymodelcombined)inFY23Eamidnetworkexpansion.Weproject
Yongda’spre-ownedvehiclesalesvolumetorise10%YoYto88,000unitsin
FY23E,amountingtomorethan50%ofitsnew-carsalesvolume.
After-salesservicesasakeyearningsdriverthisyear.Weproject
Yongda’safter-salesservicerevenuetorise15%YoYinFY23Eandto
accountfor16.5%ofitstotalrevenueamidpent-updemandandcommute
resumption.ThatcouldliftYongda’soverallgrossmarginto10.0%inFY23E
from8.9%inFY22E,basedonourestimates.Accordingly,weforecastitsnet
profittorise39%YoYtoRMB2.0bninFY23E.Webelievesuchprofitand
margincontributionfromafter-salesservicescouldbeunderestimatedby
someinvestors.
Valuation/Keyrisks.OurtargetpriceofHK$8.50isbasedon7xourFY23E
P/E,thesameasitsaverageforward12-monthP/Einthepastnineyears.We
thinkthevaluationgapbetweenYongdaanditspeerscouldnarrow,because
therisingimportanceofafter-salesservicesandYongda’sNEVexposure.We
alsoprojectYongda’sdividendyieldtoexceed8%thisyear.Keyriskstoour
ratingandtargetpriceincludelowersalesand/ormargins,slowerafter-sales
servicerecoverythanourexpectation,aswellasasectorde-rating.