Dongfeng (489.HK): 2018H review: attractive valuation September 21, 2018

Investment Summary

In 2018H1, Dongfeng reported a basically unchanged revenue, with better-than-expected EPS of RMB0.9364, representing a yoy increase of 14.9%. Sales expenses and financial costs decreased due to the lower advertising fee and exchange profit respectively. We expect Dongfeng Honda is recovering gradually in H2 and DFNissan’s capacity expansion planning is also about to be put on the agenda. Overall, we expect the Company`s result will maintain steady. In accordance with the latest data, we adjust the company`s EPS forecast, and target price to HK$10.6. The “Buy” rating is given. (Closing price as at 19 Sep 2018)

Interim result rose by 15%

In 2018H1, Dongfeng reported a basically unchanged revenue, reaching around RMB57,922 million with a slight increase of 0.3% over the previous year. The profit attributable to shareholders recorded approximately RMB8,068 million, up about 14.9% yoy; EPS was RMB0.9364, representing a yoy increase of 14.9%. The integrated gross margin was about 13.9%, a slight increase of 0.3 ppts from about 13.6% in 2017H1. With better-than-expected results, the Company continued to distribute a steady interim dividend: 10 cents per share.

About the author

Profile photo of Zhang Jing

Zhang Jing
Phillip Securities (HK)

Bachelor Degree in Tongji University of Engineering; Master Degree in East China Normal University of finance. Currently covering the automobile and air sectors. She has years of experience in investment research and is good at combining analysis for the companies with industry prospects.

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