【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)

英文研究报告 2019年08月08日 10:49 管理员

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.