[ET Net News Agency, 19 April 2018] Credit Suisse lowered its target price for Dongfeng
Motor Group (00489) to HK$9.84 from HK$15, and downgraded its rating to "neutral" from
"outperform".
The research house said the China government announced a detailed timetable to ease
ownership limits on foreign auto joint ventures. Specially, ownership limits on new energy
vehicle and special vehicle/commercial vehicle/passenger vehicle JVs will be removed from
2018/2020/2022.
It believes that foreign automakers are likely to change current 50:50 JV structure by
(1) establishing new wholly owned new energy vehicle facilities from 2018, (2) raising
ownership in existing JVs from 2022, or (3) building new facilities with majority or fully
controlled alternative.
Credit Suisse expects the stock to face immediate de-rating. Its base-case is that
Dongfeng's foreign partners (Nissan, Honda and PSA) will discontinue their JVs in 2022 via
purchasing all the JVs' stakes. (KL)