UBS released a research report stating that it maintained the “sale and sale” rating of Zhongsheng Holdings (00881), and its stock price increased by about 40% or increased its market value by 12 billion yuan after the announcement of the relevant strategy. It is believed that the market overvalued AITO stores and raised the target price for Zhongsheng from HK$8.2 to HK$9.4.
According to the report, Zhongsheng and Cyrus (601127.SH) signed a strategic cooperation agreement with the goal of operating the Huawei AITO Q specialty store under an authorized distribution model, with the goal of starting operations in January next year. Management advises the industry that the car commission rate is 4.5%. The company will also provide related after-sales, auto finance and insurance services.
The bank pointed out that even if the contribution of AITO stores is included, it is not expected that there will be a significant rebound in China's profits. Based on retail discounts at the top three German car companies, Audi, BMW and Mercedes-Benz, which rose to historic highs last month, the attractiveness of traditional high-end brands in China declined, which was affected by the increase in the competitiveness of Chinese brands and the aging of Mercedes-Benz and Lingzhi models. In addition, new energy vehicles have also affected the Chinese automobile aftermarket for a long time. The bank's research indicates that agents and independent after-sales service providers have been affected, mainly based on the decline in the usage mileage of internal combustion vehicles. The bank is expected to increase its after-sales service revenue in units this year and beyond.
