[ET Net News Agency, 2 December 2020] Daiwa Research lifted its target price for China
Yongda Automobiles Services (03669) to HK$20 from HK$13 and maintained its "buy" rating.
The research house noted that Yongda acquired the 6 BMW stores located in Sichuan and
Yunnan for CNY459m. As of 1H, Yongda had no stores in Yunnan and only one Porsche and one
JLR store in Sichuan. Daiwa believes the addition of these stores strengthens Yongda's
network in the Southwest market.
It recommended Yongda as a good proxy for BMW as Daiwa believed investors may find
Meidong's (01268) current valuation relatively high at a 2021 PER of 35x, and based on
concerns over debt issues at Brilliance's (01114) parent.
Daiwa also believes the disposal of the auto-finance business helps remove a share-price
overhang during a down cycle, aiding the stock to rerate closer to that of leading peers,
such as Zhongsheng (00881), which trades at a 2021 PER of 17x. (KL)