Morgan Stanley expects the recovery of mainland automobile dealers' profits to be slower than anticipated, lowering the earnings forecast and target price for YONGDA AUTO and MEIDONG AUTO

Morgan Stanley released a research report, still believing that mainland automobile dealers will see a recovery in profits this year, benefiting from increased sales profits of new cars from Huawei and resilient automotive repair service businesses. However, the recovery speed will be slower than expected due to the lack of new models of international brand electric vehicles and consumers' reduced preference for fuel vehicles amid high oil prices.

The bank has lowered its profit forecasts for YONGDA AUTO (03669.HK) for 2026 and 2027 by 42% to 47%, and has reduced its forecast for MEIDONG AUTO (01268.HK) by 11% to 12%, reflecting that new car profits and commission income are lower than expected. As a result, the target price for YONGDA AUTO has been lowered from HKD 1.9 to HKD 1.3, while MEIDONG AUTO's target price has been reduced from HKD 1.7 to HKD 1.5, both maintaining a "Market Perform" rating. The bank had previously lowered the target price for Zhongsheng Holdings (00881.HK) to HKD 10.5, with a rating of "Overweight."