Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-meidong-auto-holdings-limited" target="_blank" data-smartkarma-citation="entities:10795:1" rel="noopener">China MeiDong Auto (1268 HK)</a> presents an excellent investment opportunity, trading at 13.3x/8.1x FY22/23e, post street estimate revisions downwards with a dividend yield of 6.0%/10% (assuming an 80% payout). </li>
<li>China MeiDong Auto (1268 HK) 's integration of Starchase is progressing better than we expected, with metrics on inventory dramatically improving. We believe the management will focus on aftersales now. </li>
<li>The company will join the EV bandwagon by collaborating on aftersales with players having operational (not financial) difficulties performing this service, presenting a good opportunity for the company. </li>
</ul>



China MeiDong Auto (1268 HK) presents an excellent investment opportunity, trading at 13.3x/8.1x FY22/23e, post street estimate revisions downwards with a dividend yield of 6.0%/10% (assuming an 80% payout). 
China MeiDong Auto (1268 HK) 's integration of Starchase is progressing better than we expected, with metrics on inventory dramatically improving. We believe the management will focus on aftersales now. 
The company will join the EV bandwagon by collaborating on aftersales with players having operational (not financial) difficulties performing this service, presenting a good opportunity for the company. 


Meidong: Insights from Call with the Management for H1 2022

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-meidong-auto-holdings-limited" target="_blank" data-smartkarma-citation="entities:10795:1" rel="noopener">China MeiDong Auto (1268 HK)</a> raised 800mn HKD in a top placement (px~15 HKD/share), resulting in a ~4% dilution, citing an opportunistic raise for M&amp;A.</li>
<li>While the company asserts there is a well-defined pipeline, it was not very specific on the size and scope of its targets which was not taken well by the market.</li>
<li>We continue to like the company, trading at a 15x/9x PE FY22e/23e, with a 5.2%/8.8% dividend yield (assuming an 80% payout ratio), with the optionality of M&amp;A potential. </li>
</ul>



China MeiDong Auto (1268 HK) raised 800mn HKD in a top placement (px~15 HKD/share), resulting in a ~4% dilution, citing an opportunistic raise for M&amp;A.
While the company asserts there is a well-defined pipeline, it was not very specific on the size and scope of its targets which was not taken well by the market.
We continue to like the company, trading at a 15x/9x PE FY22e/23e, with a 5.2%/8.8% dividend yield (assuming an 80% payout ratio), with the optionality of M&amp;A potential. 


Meidong: Capital Raise, There's Never a Right Time

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

China MeiDong Auto / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-meidong-auto-holdings-limited" target="_blank" data-smartkarma-citation="entities:10795:1" rel="noopener">China MeiDong Auto (1268 HK)</a> is looking to raise US$100m via a top-up placement.</li>
<li>Proceeds from the offering will be geared towards potential M&amp;A and general working capital purposes.</li>
<li>In this note, we will run the deal through our ECM framework and talk about the recent updates.</li>
</ul>



China MeiDong Auto (1268 HK) is looking to raise US$100m via a top-up placement.
Proceeds from the offering will be geared towards potential M&amp;A and general working capital purposes.
In this note, we will run the deal through our ECM framework and talk about the recent updates.


China MeiDong Auto Placement - Strong Track Record and Past Deals Have Held Up

<ul>
<li>Since our note in April <a href="https://www.smartkarma.com/insights/china-meidong-back-the-porsche-at-20-hkd" target="_blank" data-smartkarma-citation="insights:69518" rel="noopener">China Meidong: Back the Porsche at 20 HKD</a>, the company is down greater than 50% despite improving fundamentals due to bearish sentiment on China.</li>
<li>The stock trades at 11.3x/6.4x FY22/23e PE. Assuming an 80% payout ratio, the stock has a 7.1%/12.5% dividend yield for FY22/23e. We believe there is an upside to the payout.</li>
<li>Checks with the company suggest Porsche sales are robust in the high double digits, and the company has overall accelerating revenue trends since Q1 2022. </li>
</ul>


Since our note in April China Meidong: Back the Porsche at 20 HKD, the company is down greater than 50% despite improving fundamentals due to bearish sentiment on China.
The stock trades at 11.3x/6.4x FY22/23e PE. Assuming an 80% payout ratio, the stock has a 7.1%/12.5% dividend yield for FY22/23e. We believe there is an upside to the payout.
Checks with the company suggest Porsche sales are robust in the high double digits, and the company has overall accelerating revenue trends since Q1 2022. 


Meidong: Now at 11.5 HKD, a Great Entry Price

Equity Analyst

Steve Zhou, CFA

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-meidong-auto-holdings-limited" target="_blank" data-smartkarma-citation="entities:10795:1" rel="noopener">China MeiDong Auto (1268 HK)</a> announced a profit warning this morning, expecting a 90% decline in net profit for 1H23.  </li>
<li>Luxury auto dealer in China is facing major uncertainties in its business model, with no visibility in the near term.  </li>
<li>However, <a href="https://www.smartkarma.com/entities/zhongsheng-group-holdings" target="_blank" data-smartkarma-citation="entities:10573:1" rel="noopener">Zhongsheng Group (881 HK)</a> currently employs the best long-term strategy amidst industry transformation.  Suggest to keep a close eye on the name. </li>
</ul>



China MeiDong Auto (1268 HK) announced a profit warning this morning, expecting a 90% decline in net profit for 1H23.  
Luxury auto dealer in China is facing major uncertainties in its business model, with no visibility in the near term.  
However, Zhongsheng Group (881 HK) currently employs the best long-term strategy amidst industry transformation.  Suggest to keep a close eye on the name. 


Zhongsheng Group (881 HK):  Could Be A Winner In The Long Run, But No Short-Term Visibility

China

China Meidong Auto Holdings Limited is an automobile dealership and maintenance group in China.

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China MeiDong Auto (1268 HK)

Meidong: Insights from Call with the Management for H1 2022

China MeiDong Auto presents an excellent investment opportunity, trading at 13.3x/8.1x FY22/23e, post street estimate revisions downwards with a...

Sameer Taneja

Meidong: Capital Raise, There's Never a Right Time

Despite its capital raise, Meidong is still a great investment, trading at a 15x/9x PE FY22e/23e, with a 5.2%/8.8% dividend yield (assuming an 80%...

Sameer Taneja

China MeiDong Auto Placement - Strong Track Record and Past Deals Have Held Up

China MeiDong Auto (1268 HK) is looking to raise US$100m via a top-up placement. In this note, we will run the deal through our ECM framework and...

Clarence Chu

Meidong: Now at 11.5 HKD, a Great Entry Price

Meidong trades at 11.3x/6.4x FY22/23e PE. Assuming an 80% payout ratio, the stock has a 7.1%/12.5% dividend yield for FY22/23e. We believe there is...

Sameer Taneja

Zhongsheng Group (881 HK): Could Be A Winner In The Long Run, But No Short-Term Visibility

Meidong profit warning. Luxury auto dealer's business model in China is facing major uncertainties, with no visibility in the near term.

Steve Zhou, CFA

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