UBS issued a report saying that Zhongsheng Holdings (0881.HK) attended the Bank's Greater China Conference, and management revealed the operation of the fourth quarter of last year, in which new car sales rose by 17% quarter-on-quarter; gross profit on new car sales remained stable; after-sales revenue increased by 20% year-on-year; and used car sales reached 40,000 units, of which 60% were high-end cars.
The bank quoted Zhongsheng as saying that this year's Sales Target for Pingzhi/Lexus in China is to grow by more than 10% year-on-year, while Toyota aims to increase by more than 20% year-on-year. In addition, management said that the company's goal this year is to increase sales of high-end cars by 25% year-on-year; with the relief of chip shortages and the adjustment of dealer rebates, the gross profit of new cars has returned to normal levels; the revenue growth level of after-sales business this year is higher than last year; and the gross margin of used car sales has improved.
UBS lowered its profit forecast of 3% for this year and next year to reflect The Pingzhi adjusted dealer rebates, and the target price was reduced from HK$88 to HK$80 accordingly, maintaining a "buy" rating.
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