【英文】摩根士丹利报告：中国汽车经销商Auto Dealers: Time to Upgrade to Luxury Cars(49P)

We maintain our constructive view on China's luxury car  demand, and forecast a +6% CAGR in 2019-20, against our expected  -4% CAGR for China’s overall passenger vehicle demand in the same  period, thanks to underpenetrated luxury car sales in China, as well  as Chinese consumers' pursuit of luxury goods given rising household  incomes and supportive demographic trends. Hong Kong-listed auto  dealers have 50-80% sales exposure to luxury car brands, so we think  they can withstand and grow beyond the cyclical weakness.  Although auto dealers' 1H19 earnings could be challenging, given  deep discounts on an inventory cleanup, we believe much of the  related pressure has passed and that it is time to look beyond the  cyclical weakness.  Near term, we expect dealers' new car margins to recover  starting from 2H19, driven by a BMW model upcycle and the new  vehicle license plate quota relaxation.

This follows prolonged margin  erosion stemming from 2H18 import tariff disruption and 1H19 China  V inventory clearance to prepare for the China VI emission standards  rollout. We expect BMW dealers to outperform peers in 2019-20,  thanks to a strong model pipeline, such as the new generation 3-series in June 2019 and localized X2 in 2H19. In Europe/US, 3-series sales  recovered from a double-digit YoY decline in 1Q19, to over 20% YoY  growth in 2Q19, after the new generation's launch; we expect the  3-series to be well received in China market, as well.  In addition, the recent relaxation of the new vehicle license plate  quota in Shenzhen / Guangzhou could boost luxury car demand and  benefit the listed auto dealers. We estimate the auto dealers in our  coverage have 20-50% sales exposure to license-restricted cities  nationwide. Thus, the existing/potential further relaxation of license  plates should benefit auto dealers.  Long term, we expect after-sales services to drive earnings  growth, supported by an expanding customer base and the business'  resilient nature. In contrast to market concerns stemming from the  growth slowdown that began in 2018 (similar to the situation in  2012-14 after the first batch of purchase tax stimulus expired), we  expect after-sales services to be a continued profit driver for auto  dealers (contributing 60-70% of consolidated gross profit in  2019-21, higher than the 40-50% in 2012-14), and helping to offset  cyclicality in the new car sales business.