Nomura raised its target price for China Yongda Automobiles Services (03669) to HK$12.9 from HK$11.4 and maintained its "buy" rating.
The research house said Yongda's 3Q total revenue increased by 34.7%, due to strong pent-up demand in the luxury segment as consumer spending in mainland China picked up following the relaxation of COVID-19 lockdowns.
With the company's backlog for BMW models up from 1 month in August 2020 to 1.5 months in September and a 2.5-month backlog for Porsche, Nomura expects strong earnings growth to continue in 4Q.
Nomura revised its 2020/21 EPS forecasts by +1.6%/+4.7%, reflecting more-than-expected new car sales margin expansion in 3Q.
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