Baoxin Auto (01293) was upgraded to increase its holdings, and the target price was raised to 6.5 yuan for Morgan Stanley

Morgan Stanley pointed out that it believes Baoxin Auto (01293.HK)'s strong growth in used car business, after-sales service and value-added services will improve the company's profit margin in the next few years. It believes its improved business model should receive better valuation indicators. The bank raised the company's rating from “synchronizing with the market” to “increase holdings” and raised the target price from 5.5 yuan to 6.5 yuan. The bank pointed out that considering that new car sales are no longer as highly profitable as in the past, some small dealers with a single business will be eliminated from the industry. Dealers with leading positions in the industry and diversified businesses, such as Baoxin, can win market share at a lower cost while maintaining profitability. The bank also pointed out that a higher-than-expected increase in used car sales will benefit the company's rapid profit growth, while the business model that provides after-sales service will prove successful in developed countries such as the United States.