Glonghui, Feb. 1 | CMB International published a research report to reduce the target price of MeiDong Auto by 44% from HK$7.2 to HK$4 based on a price-earnings ratio of 13 times for the 2024 fiscal year, maintaining a “buy” rating. According to the report, MeiDong Auto's performance in the second half of 2023 is under pressure to reduce the gross profit and goodwill of new cars. Looking ahead to 2024, the bank believes that Porsche is the most likely brand to improve profits. It is expected that Porsche's domestic sales volume will drop 13% to 70,000 units this year, the market share in the US East will be 15%, and the gross margin of new cars is expected to improve by 0.5 percentage points to 2.5%, leading to an improvement in overall gross profit of new cars. BMW and Lexus will still face challenges this year. The bank believes that BMW's sales growth target of 6% this year is quite aggressive. The target of 20% new energy penetration rate may further reduce dealers' gross profit margin for new cars, and the Lexus industry has become a brand that relies on manufacturer subsidies. The bank predicts that Meidong Auto's new vehicle sales and revenue will drop 8-9% year-on-year this year, and after-sales revenue is expected to increase by 9% per year, driving the overall gross margin to 8.6%. At the same time, it is expected that no commercial depreciation will be taken into account this year, and the Group's net profit is predicted to increase from 80 million yuan in 2023 to 370 million yuan in 2024.