Goldman Sachs raised its target price for China Harmony New Energy Auto (03836) to HK$6.4 from HK$3.1 and maintained its "buy" rating.
The research house likes Harmony on its increasingly Lexus-dominated profit growth and restructuring of non-core businesses. Between 2019 and 2023, Goldman forecast a 20k addition to annual sales volume (from 31k/annum to 51k/annum), primarily to reflect Toyota's expansion via partners with proven service quality in the past award/review cycles.
Goldman modeled Harmony's Lexus store count to increase from 7 in June 2019 to 20 by end-2023, via new dealership authorizations and opportunistic acquisitions. It expects the business to deliver above-consensus new car sales in the next three years, which would also strengthen after-sales demand, paving a path for long-term profit expansion.
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