Elevator Pitch
Hong Kong-listed Zhongsheng Group Holdings Limited (ZSHGY) [881:HK] is the second-largest automobile dealer in Mainland China and a proxy for growing Lexus and Mercedes-Benz sales in China.
Zhongsheng trades at 11.2 times consensus forward FY2020 P/E and offers a consensus forward FY2020 dividend yield of 1.9%. Zhongsheng trades at a premium to most of its Hong Kong-listed Mainland China automobile dealer peers based on forward P/E, and this is justified by the company's robust new car sales from luxury and mid-to-high end Japanese brands, and earnings contribution from after-sales & accessories