Bank of America Securities lowered the profit forecast for Zhongsheng Holdings (00881) for 2024 and 2025 by 5% and 2%.
The Zhitong Finance App learned that Bank of America Securities released a research report stating that it reaffirmed the “buy” rating of Zhongsheng Holdings (00881) and is optimistic that the used car trading and after-sales service business will become a new growth engine for the company. Taking into account operating performance in the second half of last year, the profit forecast for 2024 and 2025 was lowered by 5% and 2%, and the target price was slightly reduced to HK$17.
According to the report, the company's performance in the second half of last year was slightly better than expected. Revenue in the second half of the year increased 4% year on year to 97 billion yuan. Among them, the revenue of the new vehicle business fell 1% year on year, the average price of comprehensive products fell 1% year on year, while the gross margin of the business segment fell 2 percentage points to 0.3% year on year, mainly due to pricing pressure brought about by the price war in China's electric vehicle industry and weak demand recovery.
The bank pointed out that during the mid-rise period, used car transactions and after-sales service both recorded significant growth, exceeding market expectations. Among them, after-sales service revenue increased 9% year on year, and used vehicle sales increased 32% year on year.