HK Stock Market Move | YONGDA AUTO (03669) falls more than 5%, Credit Suisse points out that the pressure on its new car profits exceeds expectations and maintains a "sell" rating.

YONGDA AUTO (03669) fell more than 5%, after rising nearly 10% in the previous trading day. As of press time, it dropped 5.26% to HKD 2.34, with a turnover of HKD 29.49 million. On the news front, UBS released a research report maintaining a "sell" rating on YONGDA AUTO and lowering its earnings per share forecast for 2024 to 2026 by 27% to 38% to reflect higher-than-expected pressure on new car profits. The report quoted YONGDA AUTO management as saying that new car sales volume dropped by about 8% year-on-year last year, mainly due to BMW and Porsche. In the second half of last year, new car profits fell compared to the first half due to the impact of expanded retail discounts, while the gross profit margin for new car sales and related services remained basically flat. As for the impact of store closures, aftersales service revenue growth remained flat compared to last year. During the period, the company's second-hand car sales volume fell by 20% year-on-year, but the gross profit margin remained at 5% to 6%. In addition, the YONGDA management disclosed that at the end of last year the company had about 30 exclusive Xinyang Lixin Energy brand stores, of which about 10 were Huawei-supported brands. It is estimated that the number of exclusive Xinyang Lixin Energy brand stores will increase to about 50 this year, with the majority of the new stores being Huawei-supported brands. With the expansion of the store network, YONGDA expects Huawei-supported brand sales to increase from last year's 8,000 vehicles to 25,000 vehicles this year.