Citi: First to Harmony Motors (3836. HK) "Buy" rating with a target price of HK$8.8

Citi first gave Harmony Motors (3836.HK) a "buy" rating of HK$8.8, indicating that the company has a unique portfolio of ultra-luxury brands, including Rolls-Royce, Bentley, Ferrari, Limbagentine and Maserati, and expects its new car sales and after-sales service gross margins to be high, forecasting a CAGR of 10.7% for its net profit from 2021 to 2023.

Citi believes that Harmony's new car sales should be supported by the strong product cycles of the major brands BMW and Lexus, and the profit growth of its after-sales service is expected to be strong under the contribution of the lower shop and ultra-luxury brands. Citi said that Harmony Automobile's strategic investment of "Bell Repair" is a light asset brand focusing on the after-sales service of new energy vehicles, and it is expected that Bell will start to generate positive free cash flow in 2023.