DJ EQS-News: Goldman Sachs further raised MeiDong Auto (1268.HK) target price to HK$34.10; maintain Buy
EQS-News / 15/10/2020 / 17:43 UTC+8
Goldman Sachs further raised MeiDong Auto (1268.HK) target price to
HK$34.10; maintain Buy
Goldman Sachs further raised China MeiDong Auto Holdings Limited (1268.HK)
12-months target price from HK$30.0 to HK$34.10 at Buy, representing an
upside of 12.4% from the closing price of HK$30.35 as at 14th October 2020.
The upward revision was as a result of the strong sales recovery among its
luxury brands, together with favourable product pipeline and increasing
market adoption. Specifically, Goldman Sachs indicates that BMW sales volume
(c. 34% of Meidong's sales volume in 2019) has accelerated from -5% yoy
in1H20 to +42% yoy in Aug 2020, enjoying one of the fastest accelerations in
the past months which led to strong retail pricing and light dealer
inventory. It is believed that BMW's upcoming new model launches will be
able to sustain the performance, further boosting Meidong's new car sales
volume and margins.
On Lexus front (c. 18% of Meidong's sales volume in 2019), Goldman Sachs
points out that its sales volume was up +11% yoy between Jan and Aug,
outperforming the luxury market by +7% yoy and every other premium peer.
Given Meidong is one of Lexus' largest distribution partners in China, it
should be well-positioned to ride on the increase in adoption, while
benefiting from the accelerating demand from new model Lexus LM in second
half and going forward.
For Porsche (c. 8% of Meidong's sales volume in 2019), as global
manufacturing resumption has resolved some of the supply bottlenecks, sales
volume in China was +13% yoy in Aug. By considering the >2 months of demand
backlog reported by Porsche dealers, Goldman Sachs expects the substantial
pent up demand till year-end will strengthen Meidong's earnings.
To reflect the accelerating Chinese luxury auto market, Goldman Sachs hence
raised its EPS forecast in 2021-2023E by 4-7%. The latest target price of
HK$34.10 represents a 20x P/E based on 2023E EPS discounted back to 12-month
forward, to capture its long-term growth prospect.
File: Goldman Sachs further raised MeiDong Auto (1268.HK) target price to
HK$34.10; maintain Buy [1]
15/10/2020 Dissemination of a Financial Press Release, transmitted by EQS
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(END) Dow Jones Newswires
October 15, 2020 05:43 ET (09:43 GMT)
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