News Alert: China Yongda Auto (3669 HK) announced FY21 positive profit alert
What’s new
- Company expects FY21 net profit to increase by no less than 50% y-o-y; inline with expectation
- Strong new car sales and vehicle margin expansion, rising demand for after-sales services as well as robust pre-owned vehicle business have contributed to the FY21 performance
- Resilient vehicle demand and expected tight supply should support FY22 outlook
- We currently have BUY rating and TP of HK$18.40
Our view
China Yongda Auto announced it expects FY21 net earnings to increase by no less than 50%. The company reported net earnings of Rmb1.63bn in FY20. Sales of premium cars were strong in China especially in 1H21, but the momentum slowed in 2H21 due to chip shortage. The tight new vehicle supply has resulted in new vehicle margin expansions. Consumers were also extending the usage of their old cars and some opted for pre-owned cars, thus leading higher after-sales services and pre-owned car business.
The premium car market 2022 outlook remains promising as demand is resilient. We expect the tight new vehicle supply to prevail in 1H22 before easing in 2H22 on higher vehicle shipments. The Chinese premium car market is expected to post low-double digits growth in 2022.
We currently have BUY rating and TP of HK$18.40. The FY21 positive profit alert is expected to bode well on share price performance in the near-term.