UBS lowers Zhongsheng's target price to 20.8 yuan, rating "Buy"

UBS research report pointed out that it held a meeting with the management of ZHONGSHENG HLDG (00881.HK), during which the management updated the company's recent operational status. In the first ten months of this year, Huawei Aito car sales reached 27,000 units, slightly higher than the company's expectations. In addition to Aito, new car sales have seen a slight year-on-year increase so far this year; however, under industry competition, new car gross margins remain under pressure. The management believes that ZHONGSHENG is well-positioned in terms of brand portfolio and store location, and is confident in the company's long-term growth.

UBS has lowered its earnings forecasts for ZHONGSHENG HLDG for 2025 to 2027 by 12% to 18% to reflect the ongoing pressure on new car gross margins, and based on the discounted cash flow method, has reduced the target price from HKD 24 to HKD 20.8, maintaining a "Buy" rating