HK Stock Market Move | The automobile dealer continues to rebound, with the December inventory warning index hitting a 24-year low. The industry transformation to electric car distribution is helping to improve company financial reports.

Car dealers continue to rebound, as of the time of writing, YONGDA AUTO (03669) rose by 5.86% to 2.53 Hong Kong dollars; ZHONGSHENG HLDG (00881) rose by 4.11% to 12.66 Hong Kong dollars; MEIDONG AUTO (01268) rose by 2.35% to 2.18 Hong Kong dollars; HARMONY AUTO (03836) rose by 1.92% to 0.53 Hong Kong dollars. On the news front, on January 10, the China Automobile Dealers Association released the results of the December 2024 "Automobile Dealers Inventory" survey: the comprehensive inventory coefficient of automobile dealers in December was 1.14, up 2.7% month-on-month, and down 5.0% year-on-year. The inventory level is below the warning line, but in a reasonable range. CMSC pointed out that as the year-end sales volume of the car market surged, the December dealer inventory warning index fell to 50.2%, the lowest value of the year, indicating a continuous improvement in the prosperity of the automobile circulation industry. Galaxy Securities pointed out that the current trend of localization and high-end development of new energy vehicles has formed, with Huawei's car sales volume as a representative, bringing opportunities for the transformation of the domestic automobile distribution industry. We believe that the current automobile distribution sector still has a large expectation gap, with the core logic lying in the significant improvement of dealers' financial reports after the business model shifts from traditional gasoline car distribution to electric car distribution. Currently, the leading domestic automobile dealers ZHONGSHENG HLDG and YONGDA AUTO are still at historical valuation bottoms. With the operation and volume of AITO and Hongmeng Intelligent Travel stores in 2025, performance is expected to reverse.