ZHONGSHENG HLDG(00881) 开源证券·2025-01-26 08:00Investment Rating - The report assigns a "Buy" rating for Zhongsheng Holdings (00881.HK) for the first time [4]. Core Views - Zhongsheng Holdings is a leading automotive dealer in China, focusing on luxury and mid-to-high-end brands, with a strategic shift towards new energy vehicles (NEVs) [4][22]. - The company is expected to see revenue growth from 2024 to 2026, with projected revenues of 1794.76 billion, 1841.02 billion, and 1807.36 billion CNY respectively, and net profits of 25.45 billion, 31.64 billion, and 49.40 billion CNY [4]. - The current price-to-earnings (P/E) ratios for 2024, 2025, and 2026 are 11.0, 8.9, and 5.7 respectively, indicating attractive valuation compared to peers [4]. Summary by Sections Company Overview - Zhongsheng Holdings ranks first in the 2024 list of China's top automotive dealers, with a focus on luxury brands such as Mercedes-Benz and Lexus [4][22]. - The company operates 419 4S dealerships across 32 major cities in China, providing comprehensive automotive services [23]. Financial Performance - In the first half of 2024, Zhongsheng achieved a revenue of 824.21 billion CNY, with a year-on-year growth of 0.6%. However, new car sales revenue decreased by 5.8% due to price competition [31]. - The net profit for the same period was 15.8 billion CNY, reflecting a significant decline of 47.5% year-on-year, primarily due to reduced gross margins from new car sales [33]. Business Segments - New car sales faced challenges, with a gross margin of -3.3% in the first half of 2024, marking the first loss in this segment [5][37]. - The after-sales and used car segments showed resilience, with after-sales revenue growing by 9.3% and used car revenue increasing by 61.6% year-on-year [31][37]. Market Position and Strategy - Zhongsheng is transitioning towards new energy vehicle sales, having partnered with Seres to enhance its offerings in this growing market [4][22]. - The company aims to improve operational efficiency through centralized management, which has already led to significant growth in after-sales and used car businesses [6][31].