[ET Net News Agency, 3 October 2019] Daiwa Research lowered its target price for China
Yongda Automobiles Services (03669) to HK$9.2 from HK$9.5 and maintained its "buy" rating.
Yongda announced plans to acquire three 4S (sale, spare parts, service, and survey)
dealerships - one Porsche, one Benz, and one Lexus - and one Tesla repair center for
CNY830m, implying a 40% premium to NAV or a PER of 6.7x on adjusted earnings.
The research house considers the price to be fair given Yongda's 2019 PER of 7.2x. The
target company, Inchcape Asia Pacific, is low geared, with cash on hand of CNY367m.
Daiwa views the assets of high quality, as they are in high-tier cities and the brands
themselves appear to have a positive long-term outlook. It believes the acquisition will
further broaden Yongda's brand portfolio.
It estimated the planned acquisition will make a 5% contribution to Yongda's bottom line
over 2020-21. Daiwa revised up its 2020-21 EPS forecasts by 1-1.4% after factoring in
earlier-than-expected promotions for the new BMW 3 Series in September. (KL)