CICC: Maintains YONGDA AUTO (03669) Outperform Rating with a target price of HK$1.90.

CICC released a research report stating that it maintains YONGDA AUTO (03669) 2026 and 2027 profit forecasts unchanged. The current stock price corresponds to 0.3x P/B for 2026/2027. It maintains the outperform industry rating and a target price of 1.90 Hong Kong dollars, corresponding to 0.4x 2026/2027 P/B, with an upside potential of 41.8%. CICC's main points are as follows: 2025 performance meets expectations The company announced its 2025 performance: revenue of 54.6 billion yuan in 2025, with 2H25 revenue reaching 27.53 billion yuan, a sequential increase of +1.7%. New energy sector and after-sales business continue to show growth resilience Looking at the different sectors, total new car sales were 140,556 units, generating revenue of 41.7 billion yuan. Among them, luxury/high-end brand new car sales reached 99,720/27,495 units. The new energy business maintained impressive performance, with Xinxin Lixin Energy brand new car sales increasing by +40.1% year-on-year to 25,900 units. After-sales business maintained steady growth, with core maintenance business revenue increasing by +1.2% year-on-year to 9.47 billion yuan after excluding the impact of closed stores. The company's new energy business has sufficient growth momentum, and with the continuous optimization of distribution structure and increased sales of high-end models, it is expected to gradually drive overall operations to recovery. High gross profit of maintenance business supports profitability Due to intensified price competition at the terminal, the gross profit margin for new car sales and related services for the whole year was 0.1%. In addition, the maintenance business maintained a gross profit margin of 40%, with the service absorption rate increasing by +1 percentage point year-on-year to 80.2%, demonstrating stable operating efficiency and cost control capabilities. The expense ratio during 2025 was 9%, maintaining stability. Channel optimization promotes new energy transformation In 2025, the company optimized its network structure by closing 23 inefficient traditional brand stores and opening 19 new energy brand stores, increasing the proportion of new energy channels. Looking ahead, the company insists on driving new energy and luxury in parallel, optimizing channels, controlling costs, and deploying battery recycling and digital efficiency enhancement. CICC believes that it is expected to achieve a bottom rebound relying on the improvement of industry concentration. Risk warning: Intensified competition in new car market, repair of profit-making capability falling short of expectations.