[ET Net News Agency, 30 October 2019] Jefferies Research initiated coverage on China
Zhengtong Auto Services (01728) with a "hold" rating and target price of HK$2.8.
The research house said Zhengtong has shifted its focus from traditional auto dealership
to auto financing, resulting in a poorly managed new car dealership business. Operating
indicators have deteriorated and the surging leverage cannot support further expansion in
new stores.
Interestingly, the company is the first one squeezed in terms of auto financing service
fees, even though it is not a big reseller of Mercedes. Its penetration in lower-tier
cities will exacerbate the pressure and Jefferies expects further cuts in fees per car
going forward.
Jefferies added that BMW's aggressive expansion of its own auto financing business will
put pressure on Zhengtong's proprietary auto financing development, resulting in
stagnating earnings contribution from Dongzheng (02718). (KL)
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01728 ZHENGTONGAUTO
Nominal 
0.247 +0.009 (+3.782%) Others
30/10/2019 17:42
{I-bank focus}Jefferies starts Zhengtong Auto at HK$2.8
| Remark: | Real time quote last updated: 19/04/2024 18:00 |
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