China Meidong Auto 1268

[winston]

not vested

China Meidong Auto 美東汽車 (1268 HK)

Meidong’s net profit and core profit in 2017 amounted Rmb276m and Rmb250m, both above the market estimation.

Meidong is set to benefit from the strong product cycles of BMW and Porsche in the next 2-3 years, improvement in bargaining power against original equipment manufacturers as a result of new regulations on auto sales as well as sustained buoyant growth in auto financing and used-car sales.

For debts, we expect it will turn from net debt into net cash from 2018, which decreases interest rate risks.

With unique dealership in the promising lower-tier cities in China, we maintain a BUY rating with our target price set at HK$4.30, based on 13x 2018F PE, on a par with global peers.

http://www.meidongauto.com/en/index.php?

Source: UOBKH