JPMorgan's research report pointed out that Yongda Auto (03669) will deepen its cooperation with Huawei, especially in the collaboration on HarmonyOS In-Vehicle Infotainment System (HIMA), which will further expand its new energy vehicle (NEV) sales network. It is expected that by 2025, Huawei-related NEV sales outlets will account for 30% of its total dealer network.

The bank stated that this strategic move will significantly enhance its new car sales business and increase the gross margin. It is expected that the gross margin of new car sales of Huawei-related products will reach 4-4.5%, far higher than the gross margin of existing foreign brands. In addition, the bank also expects that with the average maintenance and repair costs under the Huawei brand reaching about 4000 RMB per year, Yongda Auto's after-sales service business will also be boosted.

The bank believes that the fundamentals of Yongda Auto are improving, and its cooperation with Huawei will bring new growth momentum. Therefore, the rating has been upgraded from "shareholding" to "neutral", and the target price has been increased from 1.1 HK dollars to 1.9 HK dollars. At the same time, the bank stated that Yongda Auto's stock price has risen by 12% in the past week, outperforming the Hang Seng Index, and recommended investors to pay attention to its progress and market performance in cooperation with Huawei.