According to the Wisdom Financial APP, citic sec released a research report stating that the rating of meidong auto (01268) was downgraded from 'buy' to 'shareholding'. Due to the industry demand pressure in 1H24, the company's 2024/2025 revenue forecast was revised down to 21.82/20.833 billion yuan, with an additional 2026 revenue forecast of 20.021 billion yuan. The net income forecast was lowered to 0.059/0.28 billion yuan, with an additional 2026 net income forecast of 0.312 billion yuan. Due to the loss in 1H24, the company chose a comparable company valuation method. Considering that meidong auto mainly focuses on luxury car brands and has higher turnover efficiency, it should enjoy a premium with high profit certainty, giving it a target price of 2.0 Hong Kong dollars (original target price 7.0 Hong Kong dollars).

The report stated that the company's revenue in 1H24 was 14.09 billion yuan, a year-on-year decrease of -24.4%; the company's gross margin was 7.6%, and the net margin in 1H24 was -0.2%. The gross margin for new car business was affected by weak demand for luxury joint venture models and continuous impact of price wars, with the company's new car sales continuing to bear price pressure, resulting in a new car gross margin of -5.1%. However, the bank believes that the worst time for new cars is already over. In July, BMW announced the end of the price war, and Porsche also announced a reduction in volume and confirmed profit lock-in in the China region. The pressure on the new car side is expected to gradually ease in 2H24. Sales of after-sales service business in 1H24 showed steady growth in volume and after-sales gross margin increased to 59.8%, driving the absorption rate to 231.5%. The bank believes that the company's after-sales service business growth remains stable, and the company still maintains a high-efficiency operational foundation. The bank believes that the future pressure on the new car front will continue to ease marginally, while with the continuous increase in the proportion of after-sales services, the company's performance is expected to gradually improve.