EQS-News / 06/01/2021 / 18:41 UTC+8 
 
Citi further raised MeiDong Auto (1268.HK) target price to HK$40.0; maintain 
                                                                         Buy 
 
   Citi raised China MeiDong Auto Holdings Limited (1268.HK) 12-month target 
  price from HK$39.0 to HK$40.0 at Buy, representing an upside of 27.2% from 
        the closing price of HK$32.35 as at 4th January 2021 (incl. expected 
                                                            dividend yield). 
 
   The upward revision was supported by the positive takeaways from a recent 
 management call on (i) Meidong's low inventory level with abundant backlog, 
   (ii) steady expansion plan with potential M&A, together with (iii) strong 
 improvement in store efficiency and (iv) continuous outperformance from the 
                                                          luxury car market. 
 
       Citi indicated that Meidong's order backlog remains abundant, and the 
  Company expects inventory to continue to decline with strong market demand 
   in China. In the case of Porsche, Meidong's order backlog is currently at 
2-3 months, with selling prices significantly above suggested retail prices, 
 potentially due to the pricing in of uncertain production amid the European 
 pandemic. Meanwhile, for BMW, Meidong's order backlog is within 1 month and 
  retail prices remain stable. However, management believes that approaching 
    Chinese New Year in February 2021, sales volumes of BMW will remain at a 
       high level and the inventory level could decline largely before then. 
 
     On network expansion, Citi pointed out that while currently there is no 
 update on M&A pipeline, the Company is expected to open 7 greenfield stores 
in 2021, which is in-line with the previous target of 10% new organic stores 
each year. Meidong also saw success in its CRR (Customer Return Ratio) pilot 
   project, which has successfully boosted after-sales service engagement of 
   the 5 stores from 5-12% in Aug-20 to 20-30% in Dec-20. The CRR program is 
       now being applied to 50 stores, which suggests further improvement in 
                                                     operational efficiency. 
 
     From a macro viewpoint, management expects luxury cars will continue to 
 outperform the sector into 2021, guiding a 12-15ppt higher YoY sales volume 
      growth. To reflect the accelerating Chinese luxury auto market and the 
  aforementioned positive management guidance, Citi hence raised its 2021/22 
        EPS estimates by 42.2%/1.7%, with the latest target price of HK$40.0 
                                          pointing to a 30x blended 21E P/E. 
 
File: Citi further raised MeiDong Auto (1268.HK) target price to HK$40.0; 
maintain Buy [1] 
 
06/01/2021 Dissemination of a Financial Press Release, transmitted by EQS 
Group. 
The issuer is solely responsible for the content of this announcement. 
 
Media archive at www.todayir.com 
 
1: https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=63454267789f38532d79ec3f3fa582a6&application_id=1158818&site_id=vwd&application_name=news

(END) Dow Jones Newswires

January 06, 2021 05:42 ET (10:42 GMT)