Investment Rating - The report maintains a BUY rating for Meidong Auto, with a target price of HK2.18 [3][9]. Core Insights - Meidong's core earnings for 2H24E are projected to remain stable quarter-on-quarter, with profit improvements expected from BMW and Lexus, potentially offset by Porsche's declining profits [1][9]. - The report highlights rising impairment risks in 2H24E due to Porsche's worsening profit, with an estimated impairment loss of RMB1.3 billion for FY24E [1][9]. - The FY25E net profit estimate has been revised upward by 7% to RMB408 million, reflecting a more positive outlook for Porsche dealers and reduced interest expenses following the redemption of convertible bonds [1][9]. Financial Summary - Revenue for FY24E is projected at RMB21,859 million, a decline of 23.4% year-on-year, while FY25E revenue is expected to be RMB20,968 million, a further decline of 4.1% [2][11]. - Net profit for FY24E is expected to be a loss of RMB1,105 million, with a recovery to RMB408 million in FY25E, representing a significant turnaround [2][11]. - The report anticipates a gross margin of 7.3% for FY24E, with an improvement to 8.3% in FY25E [11][12]. Earnings Projections - New-car sales volume is expected to rise by 12% quarter-on-quarter in 2H24E, contributing to a 6% increase in new-car revenue [1][9]. - The overall gross margin is projected to narrow by 0.5 percentage points to 7.1% in 2H24E, resulting in a gross profit of RMB792 million [1][10]. - The report estimates a net loss of RMB1.1 billion for 2H24E, but a net profit excluding impairment of RMB70 million is anticipated [1][10]. Share Performance - The stock has shown a 1.4% increase over the past month, but a decline of 13.1% over the past three months [5]. - The market capitalization of Meidong Auto is approximately HK$2,934.8 million [3]. Shareholding Structure - Apex Sail Limited holds a significant 52.3% stake in Meidong Auto, indicating concentrated ownership [4].
美东汽车：2H24 earnings preview: Stable operating profit with rising impairment risk-20250217