UOB Kay Hian lowered its target price for Dah Chong Hong (DCH)(01828) to HK$5 from HK$5.3, but upgraded the stock to "buy" from "hold".
The research house said DCH's Hong Kong automobile business should continue to perform well in 2H with margins boosted by the sharp yen depreciation. But car sales in 4Q were slightly affected by the "Umbrella" protests.
For its China automobile segment, 4Q saw a sales slowdown and inventory pile-up but margins should remain flat. UOBKH sees value emerging from DCH on steady after-sales services and a 5% dividend yield. It expects DCH's net profit forecasts for 2014-16 at HK$949mn, HK$1,020mn and HK$1,125mn, implying yoy growth of 9%, 7.5% and 10%.
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