HK Stock Market Move | MEIDONG AUTO(01268) rose nearly 4%, institutions believe the company's cash flow is healthy, Porsche may hit bottom in China by 2025.

MEIDONG AUTO (01268) rose nearly 4%, up 3.9% at the time of publication, to HK$2.13, with a turnover of HK$105.687 million. On the news front, CMB International released a preview of MEIDONG AUTO's performance, stating that the company's operating profit is expected to remain stable on a month-on-month basis and cash flow healthy. According to the channel survey conducted by the bank, the dealer profits of BMW and Tesla brands in 2H24 have increased month-on-month, but this incremental profit may be offset by the continuous decline in profits of the Porsche brand. The bank predicts that MEIDONG's gross profit in 2H24 will decrease by 2% to HK$792 million. At the same time, the bank expects MEIDONG's free cash flow for the fiscal year 24 to be HK$458 million, which is similar to that of the fiscal year 23. Furthermore, the bank believes that Porsche may bottom out in China in 2025: with changes in Porsche's management and continuous trial and error in the Chinese market, the bank believes that Porsche will face the challenges in China and optimize sales and prices. This may benefit its dealers, especially those with a high proportion of Porsche, such as MEIDONG. In addition, with the redemption of convertible bonds to lower interest costs and possible impairments to reduce annual amortization of intangible assets, the bank has raised MEIDONG's net profit for fiscal year 25 by 7% to HK$408 million.