Elevator Pitch
I maintain my "Neutral" rating on Hong Kong-listed Chinese automobile dealer China Yongda Automobiles Services Holdings Limited (OTC:CYYHF) [3669:HK].
It is difficult to judge whether China Yongda's decision to omit dividends for FY2019 was a correct one. On one hand, reserving and allocating more cash to expanding the company's outlet network and growing its after-sales services business is not wrong. On the other hand, China Yongda's dividend omission could be sending a negative signal about the company's future capital allocation strategy and its outlook on new vehicle sales in FY2020.
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