ZHONGSHENG HLDG (00881) surged over 4% before noon. At the time of writing, the stock was up 4.47%, trading at HK$12.4, with a turnover of HK$54.38 million. On the news front, BMW China has adjusted the suggested retail prices for 31 of its main models effective January 1, 2026. Among these, 24 models saw price reductions exceeding 10%, five models were cut by over 20%, with some models experiencing maximum official price drops of more than 300,000 yuan. Morgan Stanley believes that dealers like ZHONGSHENG HLDG will see slight benefits. As suggested retail prices are lowered, dealers can also enjoy lower purchase costs, immediately boosting their gross margins on new car sales. However, the additional rebates dealers receive in the future may also decrease, as rebate amounts are determined by the manufacturers. Furthermore, the 2026 vehicle trade-in subsidies are linked to the vehicle's price. Morgan Stanley indicated that subsidies for cars priced below 150,000 yuan have decreased year-on-year, while vehicles priced between 150,000 and 200,000 yuan can maximize the available benefits; high-end models remain unaffected by the adjustments to the subsidy policy. The firm expresses a preference for automakers offering high-end models within the auto sector, which also benefits ZHONGSHENG HLDG's representation of premium brands.