CICC maintains its earnings forecasts for YONGDA AUTO (03669) for 2025 and 2026 unchanged. The current stock price corresponds to 0.3x/0.3x price-to-book ratios for 2025/2026. The firm maintains its Outperform rating and HK$3.00 target price, representing 0.5x 2025 price-to-book ratio and 0.5x 2026 price-to-book ratio, implying 40.9% upside potential from the current stock price.
The company announced its interim results for 2025, achieving revenue of 27.072 billion yuan in 1H25, which met market expectations. Key observations are as follows:
Revenue Structure Optimization with New Energy as Core Growth Driver
In 1H25, luxury/mid-to-high-end brand new vehicle sales reached 48,959/13,230 units respectively, generating revenue of 15.668/1.890 billion yuan. The maintenance and repair business remained stable with revenue of 4.66 billion yuan, flat year-over-year. Notably, the new energy vehicle business achieved counter-cyclical growth, with independent new energy brand new vehicle sales increasing 49.0% year-over-year to 10,312 units. Benefiting from the premium positioning breakthrough of domestic brands, the average selling price reached 267,300 yuan, driving revenue growth of 11.82% year-over-year to 1.219 billion yuan, supporting revenue resilience.
The firm believes that with the volume ramp-up of high-end models such as Hongmeng Zhixing and IM Motors, along with the large-scale delivery of existing orders in the second half, the proportion of new energy vehicle business is expected to further increase, driving continued optimization of revenue structure.
Focus on New Energy Transformation and Strategic Upgrade to Strengthen Growth Foundation
In the first half, the company added 30 new energy brand authorizations and planned 14 new energy showrooms (13 of which are Hongmeng Zhixing), while closing 12 traditional brand showrooms, accelerating transformation toward the new energy track. In innovative business areas, the company has expanded into battery recycling and intelligent robotics, actively exploring AI technology applications to cultivate new growth drivers for long-term development. The firm believes the company's forward-looking strategic positioning will gradually release value.
Risk Warning: Intensified new vehicle competition and profit recovery falling short of expectations.