What we recommend

We reiterate our Buy (1) rating on theback of the strong after-sales serviceearnings and commission growththat we see over 2013-15. We areraising our SOTP-derived six-monthtarget price to HKD6.71 (fromHKD6.37). We are rolling over ourvaluation basis to 2014 earnings, andapply a 6.5x PER to the combined2014 commission derived and newcarsales profit (previously, 9.5x on 2013E), and a 12x PER to the aftersalesprofit (previously, 16x on2013E). We are lowering our PERs tofactor in the upcoming low season(we previously used high seasonmultiples). Risk includes a price warresulting from an economic hardlanding in China, leading to ASP cuts.

How we differ

Our 2013-15 EPS are 5-32% higherthan those of the Bloombergconsensus as we assume higherpretax margins from the increasedoperating leverage and a betterprofit mix.

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