永达汽车(03669.HK)：FY17 in line; margin improvement continues in FY18

机构：交银国际

Y17 net profit surged 77.4% YoY. Revenue rose 17.8% YoY to RMB50,699m, while net profit surged 77.4% YoY to RMB1,510m, which was better than its pre-alert of >70% earnings growth. New car sales volume increased 16.6% YoY to 171,640 units in FY17, with new car sales margin improving from 3.1% in FY16 to 3.7%. Revenue from after-sales service rose 22.7% YoY to RMB6,685m, while the segment’s GPM remained largely flat at 46.1% vs 45.7% last year. Revenue of proprietary finance business surged 170.9% YoY to RMB331m. The margin improvement across segments helped to lift its FY17 blended GPM to 9.9% from 8.8% in FY16. 

till room for margin improvement in FY18. We expect Yongda’s new car sales margin to continue to improve in FY18 driven by better brand mix. In FY17, the company opened 14 new dealer/service stores, and obtained 14 more through acquisition. Most of the new stores had high sales margin, including six Porsche (~7% sales margin) and three Lincoln (~5% sales margin) stores. We expect Yongda to add 25-30 dealer/service stores in FY18 with a focus on higher-margin brands.  Meanwhile, SG&A expenses as a percentage of total revenue was largely flat at 7% in FY17. We expect the ratio could drop in FY18 mainly due to improving operating efficiency of new stores acquired in FY17.   

Valuation looks very undemanding; maintain Buy. We reiterate our positive view on Yongda mainly due to its high exposure to BMW and other luxury brands. The company is actively expanding its dealer stores with brands of higher sales margin (e.g. Porsche and Lincoln). Its improving new car sales margin and fast growth of after-sales & other value-added services should help to secure earnings growth in FY18, in our view. We keep our FY18-19 earnings forecasts largely unchanged. We maintain our Buy rating and TP of HK$16.00, which implies FY18 P/E of 11x. 

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