CICC: Sector valuations have declined, reducing Zhongsheng's target price by 29% to HKD 18

CICC published a report indicating that ZHONGSHENG HLDG's net profit last year fell by 36% year-on-year to 3.21 billion yuan, in line with the bank's expectations. The rating is maintained at "outperform the industry," but due to the decline in sector valuations, the target price is lowered by 28.9% to HKD 18. The report states that new car sales profitability is under pressure due to terminal discounts, while the after-sales business contributes stable profits. The company has established 37 Aito brand stores and is expanding the HarmonyOS intelligent travel ecosystem based on the Huawei platform, which is expected to supplement the company's luxury brand matrix and further enhance its market share in the new energy luxury vehicle market. The company has consistently maintained dividend payments, with the dividend payout ratio expected to increase to 46.7% in 2024. As profits gradually improve, greater shareholder returns are anticipated. CICC maintains its profit forecast for ZHONGSHENG HLDG for 2025 and introduces a net profit forecast of 4.97 billion yuan for 2026 for the first time. The bank lowers the target price to HKD 18, equivalent to forecasted price-to-earnings ratios of 10.7 and 8 times for this year and next, respectively, while maintaining the "outperform the industry" rating