1H22: Profit Down 8.5% yoy, In Line With Estimates; Cut Target Price To HK$65.00 On Slower Store Count Growth
Zhongsheng’s net profit dropped 8.5% yoy to Rmb3,446m in 1H22, in line with our estimate. The earnings drop was due to a decline in new-car sales as a result of the Shanghai lockdown during March-April. For 2H22, we expect new-car sales to rebound along with the lifting of lockdowns and increasing supplies from OEMs. Given slower store additions, we cut our 2022-24 EPS estimates by 10-14%. Maintain BUY. Cut target price from HK$98.00 to HK$65.00.