【行业研究报告】美东汽车-2H24 earnings preview: Stable operating profit with rising impairment risk

17Feb2025
CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdate
MeidongAuto(1268HK)
2H24earningspreview:Stableoperatingprofitwith
risingimpairmentrisk
MaintainBUY.WeprojectMeidong’s2H24Ecoreearningstobelargelystable
HoH,asprofitimprovementfromBMWandLexusmaybeoffsetbyPorsche.
Webelievetheimpairmentriskshavebeenrisingmoresignificantlyin2H24E
givenPorsche’sworseningprofit.Ontheotherhand,loweramortizationburden
couldliftitsearningsinthefuture,shouldthecompanybookalargeimpairment
lossonintangibleassetsin2H24E.That,alongwithMeidong’sconvertiblebond
redemptioninJan2025andourslightlymorepositiveviewsonPorschein
FY25E,hasmadeusraiseMeidong’sFY25Enetprofitby7%.
ProfitsfromBMWandLexusstoresarelikelytoimproveHoHin
2H24E.WeprojectMeidong’sBMWnew-cargrossmargintoimproveby1
2H24E.WeprojectMeidong’sBMWnew-cargrossmargintoimproveby1
pptHoHin2H24Eamidlowersalesvolume(-3%HoHonourestimates)
andhigherrebatesfromtheOEMin4Q24.WealsoestimateMeidong’s
Lexusnew-cargrossmargintoimproveby2.1pptsHoHin2H24E,which
couldmakeLexusstoresthelargestprofitcontributoratMeidonginFY24E,
basedonourestimates.
Porsche’sworseningprofitin2H24Emayincreaseimpairmentrisks.
WeprojectMeidong’sPorschesalesvolumetorise9%HoHtoabout4,500
unitsin2H24Ewithnew-cargrossmarginnarrowingby2ppts.Weestimate
thatprofitimprovementfromBMWandLexusin2H24Ecouldbeoffsetby
PorscheatMeidong.Moreover,weareoftheviewthatPorschestores’
deterioratingprofitsinthepastfourreportingperiodscouldincreasethe
impairmentrisksofgoodwillandintangibleassetsfromtheStarChase
acquisition,especiallyassmallbutincreasingamountsofimpairmentlosses
werealreadybookedinFY23and1H24.Weprojectanimpairmentlossof
RMB1.3bninFY24E(orRMB1.15bnin2H24E)forMeidong.
Weexpect2H24Enetprofitexcludingimpairmenttobestillinpositive
territoryandFY24EfreecashflowtobestableYoY.Weproject
Meidong’snew-carrevenuetorise6%HoHin2H24E,drivenbysales
volumegrowthof12%HoH.Weexpectits2H24Eoverallgrossmarginto
narrowby0.5pptsto7.1%,whichwouldresultinagrossprofitof
RMB792mn(-2%HoH)in2H24E.WeprojectMeidong’s2H24Enetlossof
RMB1.1bnandanetprofitexcludingimpairmentofRMB70mn.Ontheother
hand,weestimateMeidong’sfreecashflowtobeRMB458mninFY24E,a
similarlevelasFY23,aidedbyitsoperationalefficiency.Therefore,we
projectanetcashofaboutRMB586mnatMeidongasoftheendofFY24E.