CMB International Securities analyst Ji Shi maintained a Buy rating on China Yongda Automobiles Services (CYYHF – Research Report) today and set a price target of HK$3.20.
Ji Shi has given his Buy rating due to a combination of factors that highlight China Yongda Automobiles Services’ strategic positioning and financial performance. The company has successfully carved out a significant presence in the New Energy Vehicle (NEV) dealership sector, leveraging partnerships with NEV automakers to establish a first-mover advantage. This strategic focus is expected to counterbalance the decline in luxury car sales, with an ambitious target of selling 45,000 NEV units this year, representing a substantial portion of their total sales volume.
Additionally, Yongda’s effective cost control measures, particularly in selling, general, and administrative expenses, have bolstered confidence in its earnings growth potential for the upcoming fiscal year. The company’s dividend yield is projected to reach 9%, assuming a payout ratio of 80%, which is an attractive proposition for investors. Furthermore, the forecasted improvement in gross profit margins, driven by a better brand mix and stable after-sales service contributions, supports the positive outlook. These factors, coupled with an increase in net profit forecasts and a revised target price, underpin Ji Shi’s Buy rating for the stock.
Shi covers the Consumer Cyclical sector, focusing on stocks such as China MeiDong Auto Holdings, Geely Automobile Holdings, and Nio. According to TipRanks, Shi has an average return of 10.0% and a 57.81% success rate on recommended stocks.