Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<p>Luxurious auto car distribution in China sounds like a great business to have, supported by the rising number of wealthy individuals springing up in various parts of the Middle Kingdom. However, the sector seems to be very fragmented where no single companies is able to have significant market share as none of them has exclusive distribution rights over a particular foreign brand including <a href="https://www.smartkarma.com/entities/10795" target="_blank" data-smartkarma-citation="entities:10795:1">China Meidong Auto (1268 HK)</a> . </p><p>The recent share price surge powered by growth expansion from the single city single store initiative (in third and fourth tier cities) may not last long as there is nothing stopping any competitor to expand to these markets when demand still outstrip supply therefore margin is better compared to the first tier cities. However, it also brings the question whether the fresh demand from the new wealth in the third and fourth tier cities have enough depth to sustain China Meidong Auto's sales growth.</p>

Luxurious auto car distribution in China sounds like a great business to have, supported by the rising number of wealthy individuals springing up in various parts of the Middle Kingdom. However, the sector seems to be very fragmented where no single companies is able to have significant market share as none of them has exclusive distribution rights over a particular foreign brand including China Meidong Auto (1268 HK) . The recent share price surge powered by growth expansion from the single city single store initiative (in third and fourth tier cities) may not last long as there is nothing stopping any competitor to expand to these markets when demand still outstrip supply therefore margin is better compared to the first tier cities. However, it also brings the question whether the fresh demand from the new wealth in the third and fourth tier cities have enough depth to sustain China Meidong Auto's sales growth.

China Meidong Auto (1268): Low Inventory to Carry On?

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

Value-focused bottom-up Asian equity research

NVB Asia Pte Ltd

<ul><li>China Meidong is a car distributor in China's Tier 3/4 cities with 34 stores at end of 2016</li><li>What started with distribution of Toyota/Lexus has evolved into focus on Porsche and BMW</li><li>Company still trading below IPO price of 1.8 HKD (listed on HKex since December 2013)</li><li>New BMW 5-series launch and store expansion should produce strong 2017 results</li><li>Management led by MIT graduate Ye Tao and his brother Ye Fan, who jointly own 69% of company</li><li>Shares trading at 6.75x 2017 P/E and offer 5.8% dividend yield</li><li>Fair Value: 1.9 HKD (bear case) 24% upside; 2.53 HKD (base case) 65% upside; 3.17 HKD (bull case) 107% upside</li></ul>

China Meidong is a car distributor in China's Tier 3/4 cities with 34 stores at end of 2016What started with distribution of Toyota/Lexus has evolved into focus on Porsche and BMWCompany still trading below IPO price of 1.8 HKD (listed on HKex since December 2013)New BMW 5-series launch and store expansion should produce strong 2017 resultsManagement led by MIT graduate Ye Tao and his brother Ye Fan, who jointly own 69% of companyShares trading at 6.75x 2017 P/E and offer 5.8% dividend yieldFair Value: 1.9 HKD (bear case) 24% upside; 2.53 HKD (base case) 65% upside; 3.17 HKD (bull case) 107% upside

China Meidong (1268 HK): MIT Graduate Leading Car Distributor to Success in China's Tier 3/4 Cities

China

China Rundong Auto Group Limited operates as an automobiles dealer. The Company sells middle to high end cars, luxury and ultra luxury autos, and other motor vehicles. China Rundong Auto Group also offers related after sale services.

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China Greenland Rundong Auto (1365 HK)

China Meidong Auto (1268): Low Inventory to Carry On?

Luxurious auto car distribution in China sounds like a great business to have, supported by the rising number of wealthy individuals springing up...

Henry Soediarko

China Meidong (1268 HK): MIT Graduate Leading Car Distributor to Success in China's Tier 3/4 Cities

China Meidong is a car distributor in China's Tier 3/4 cities with 34 stores at end of 2016 What started with distribution of Toyota/Lexus has...

Nicolas Van Broekhoven

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