DCH(1828.HK) : Results highlights

Dah Chong Hong Holdings(DCH) (1828): Results highlights

DCH Holdings, one of the leading auto distributors in the PRC, announced results for 2012. During the year, revenue grew 4.1% YOY to HK$48.0B. However, due to lower profit margin on new car sales and the worsened relationship between China and Japan in 2H12 (which affected sales of Japanese branded cars), net profit declined by 21.0% YOY to HK$1,045M, equivalent to HK$0.57 per share. Full-year dividends reached HK$0.2066 per share (interim dividend HK$0.118; final dividend HK$0.089), down 23% YOY. DCH distributes a variety of foreign-branded autos in the PRC. The Japanese brands under its distributorship include Toyota, Lexus and Isuzu. Given the depressed Japanese car sales in 2H12, the results should be more or less expected by the market. Analyzing by segments, segment profit of auto dealership in HK & Macau was HK$303M, down 10.6% YOY. Segment profit of auto dealership in the Mainland was HK$999M, down 23.6% YOY. Auto sales in the Mainland declined by 5.2% to 81,000 units. Segment profit of food and consumer products distribution was HK$280M, up 26.1% YOY. During the year, DCH added only four 4S shops to 69, below the target of adding 15 shops due to tough market conditions. At HK$7.88, DCH is trading at historical P/E of 13.8x. The counter could be fairly valued with moderate growth prospect this year.