Zhi Tong Cai Jing·2025-09-02 08:56Core Viewpoint - Zhongsheng Holdings (00881) reported a net profit attributable to shareholders of 1.011 billion RMB for the first half of the year, which is approximately 50% lower than market consensus expectations, primarily due to pressure on profitability from new and used cars [1] Group 1: Financial Performance - The decline in new car gross margin is significantly influenced by the timing of manufacturer subsidies [1] - The management believes that the new car market is about to see a turnaround, driven by ongoing channel consolidation and market share concentration towards leading players [1] - The company has maintained an "overweight" rating but has lowered its target price from 24 HKD to 22.3 HKD, which corresponds to a 12.8 times price-to-earnings ratio for the fiscal year 2025, aligning with historical averages [1] Group 2: Market Outlook - The brokerage firm shares the management's view that new car gross margins have likely bottomed out, citing reasons such as manufacturer subsidies being confirmed mainly in the second half of the year [1] - The implementation of anti-involution policies in the industry is expected to stabilize end-user prices in the second half of the year [1] - The company’s main brand, Mercedes-Benz, is set to launch over 30 new models in the next two years, indicating a strong product cycle and enhanced pricing resilience, which could lead to profit recovery [1] Group 3: Profit Forecast Adjustments - The brokerage has revised its profit forecasts for Zhongsheng Holdings for 2025 to 2027 down by 8%, 5%, and 4% respectively, reflecting the short-term impact of declining profit margins in new and used cars [1]