20250331-招银国际-永达汽车-03669.HK-NEV_to_offset_luxury,_cost_control_to_drive_profit_5页_1mb

Summary of Yongda Automobiles (3669 HK)

Core Content

Yongda Automobiles (3669 HK) is a company that has been actively expanding its New Energy Vehicle (NEV) dealership network to offset the decline in luxury car sales. Despite facing unexpected impairment losses, the company's 2H24 net profit remained largely in line with expectations, which reflects its effective cost control measures. The report highlights the company's strategic shift towards NEVs, its financial performance, and its valuation metrics.

Main Points

• Strategic Shift to NEVs: Yongda has established a first-mover advantage in the NEV dealership sector through years of trial and error and partnerships with NEV automakers. The company has set a target of selling 45,000 NEVs this year, which is nearly 30% of its total sales volume.

• Sales and Profitability:

  • In 2H24, Yongda's revenue rose 4% YoY to RMB32.4bn, aligning with forecasts.
  • The gross profit margin (GPM) remained flat HoH at 8.3%, slightly below the forecast.
  • Net profit in 2H24 was RMB89mn, in line with expectations despite an impairment loss of RMB85mn.
  • The company's net profit for FY24A was RMB201mn, and for FY25E it is forecasted to increase to RMB547mn, with a further rise to RMB704mn in FY26E.

• Cost Control and Dividend Yield:

  • Better cost control in SG&A expenses in FY24 has led to more confidence in FY25 earnings growth.
  • The company is projected to have a dividend payout ratio of 80% in FY25-26E, leading to a dividend yield of 9-12%, compared to 122% in FY24A and a yield of 5.1%.

• Earnings Forecast and Valuation:

  • The report raises FY25-26E net profit forecasts by 7-8%, to RMB547mn and RMB704mn, respectively.
  • The target price (TP) is raised to HK$3.20, up from HK$1.80, based on a 10x multiple of the revised FY25 EPS.
  • The current price is HK$2.67, and the TP is 19.9% higher than the current price.

• Financial Performance:

  • Revenue for FY24A is RMB63,420mn, and is expected to decrease slightly in FY25E and FY26E.
  • Gross profit for FY24A is RMB5,273mn, with an expected increase to RMB5,551mn and RMB6,077mn in FY25E and FY26E, respectively.
  • Net profit is expected to grow significantly from FY24A to FY25E and FY26E, with a forecast of 172.2% and 28.8% YoY increases.

• Valuation Metrics:

  • P/E ratio for FY24A is 23.7, while for FY25E and FY26E it is projected to be 8.6 and 6.7, respectively.
  • P/B ratio remains consistent at 0.3 for all years.
  • Dividend yield is projected to increase from 5.1% in FY24A to 9.3% in FY25E and 12.0% in FY26E.

• Key Risks:

  • Lower sales volume or margins.
  • Severe decline in after-sales services.
  • Sector de-rating.

Key Information

• Shareholding Structure:

  • Mr. Cheung Tak On holds 30.8% of shares.
  • FIL Limited holds 8.9% of shares.

• Stock Data:

  • Market Cap: HK$5,051.4mn.
  • 52-week High/Low: HK$3.24/HK$1.24.
  • Total Issued Shares: 1,891.9mn.

• Share Performance:

  • 1-month return: -1.5% absolute, -3.5% relative.
  • 3-month return: 9.0% absolute, -6.5% relative.
  • 6-month return: 57.1% absolute, 38.3% relative.

• Dividend Trends:

  • Full-year proposed dividends for FY24A were RMB244mn, with a payout ratio of 122%.
  • Dividend yield for FY24A was 5.1%, and is expected to reach 9-12% in FY25-26E.

• Financial Highlights:

  • Net profit in FY24A was RMB201mn, with a net margin of 0.3%.
  • Net profit is forecasted to increase significantly in FY25E and FY26E.

• Dividend and Earnings Growth:

  • The report emphasizes the importance of dividend yield and earnings growth in the company's performance.
  • The company's focus on cost control is a key driver for future earnings.

• Analyst Ratings:

  • The report maintains a BUY rating for Yongda Automobiles.
  • The target price is HK$3.20, indicating a positive outlook for the stock.