Investment highlight
Industry integration, long-term optimistic about the backdoor landing of A shares after Yongda's new business development in the automotive service industry, given a "recommended" rating, the target price of 15.6 yuan, corresponding to 30 times Pmax E in 2016.
The profit elasticity of the dealer industry increases, and the gross profit margin of new car sales is expected to hit bottom and pick up. In the short term, during the interest rate cut cycle, financing costs fall, and the dealer industry with high asset-liability ratio is the most sensitive. In addition, the relatively cautious expectations of car companies this year and the recovery of the car market will keep dealer inventories relatively low in the third quarter. The decline in financing costs and the recovery in passenger car demand after May this year have brought performance flexibility to the car dealership industry in 2016. In the medium term, the industry began to integrate with relevant policy changes, which is conducive to the bottom of the gross profit margin of new car sales of the leading enterprises in the dealer industry.
The main business structure continues to optimize, and the after-sales service starts the road of transformation. Yongda continues to adjust its sales strategy and product structure, and actively develops the post-market business with high gross profit margin. The contribution of gross profit of new car sales has dropped from 44% in 13 years to 33% in 15 years. We expect that it will continue to drop to less than 30% in 16 years, thus leading to the improvement of comprehensive gross profit margin. In addition, the company is completing the role transformation from after-sales agent to self-management. At present, it has carried out independent after-sale spare parts sales, high gross profit self-management business such as branded maintenance products, with the future expansion of networks and channels, the establishment of user base will lead to the rapid growth of self-management business profits.
Emerging areas cover a comprehensive, epitaxial expansion strives for a long-term trend. Yongda focuses on deepening the development of auto finance, including financial leasing and commission agents, second-hand cars and independent after-sales business, as well as a strong alliance with well-known e-commerce companies to improve the O2O network layout, has achieved a more comprehensive coverage of emerging businesses. The company intends to devote 3.5 billion of the funds raised to the financial leasing business in order to achieve the goal of contributing nearly 400 million profits and 10 billion interest-bearing assets in 2020. The company develops both wholesale and retail of used cars in parallel, and adopts the O2O model to set up the official website of "Yongda used car Mall". Driven by favorable policies, we believe that Yongda's used car business will maintain rapid growth.
Financial forecast
We predict that the company's 17-year net profit will reach 8 billion yuan, corresponding to a year-on-year growth rate of 56.9% and 25.1%.
Valuation and suggestion
Yongda's market capitalization, valuation and operating capacity will provide options for A-share investors. For the first time, it is given a "recommended" rating, with a target price of 15.6 yuan, corresponding to 2016e 30x Ppace E.
Risk.
There is uncertainty in backdoor; M & A makes management more difficult; new business development is not effective.