[ET Net News Agency, 13 June 2018] HSBC Global Research raised its target price for
Dongfeng Motor Group (DFM)(00489) to HK$11.9 from HK$9.9, and retained its "buy" rating.
The research house said DFM has four auto manufacturing JVs, with Nissan, Peugeot, Honda
and Renault. All four JVs are owned under a 50/50 JV structure. HSBC thinks that Nissan's
choice of only establishing one JV in China is a testament to the strong relationship with
DFM.
HSBC thinks that luxury car makers are more likely to consider leaving their JVs given
their well-established brand names in China. Hence, DFM has a lower risk given the market
segment exposure of the Japanese and French brands that are in the premium market rather
than luxury.
It made minor adjustments to its depreciation schedule, which has resulted in 1-4%
changes in FY2018-20 EBIT and EBITDA estimates. (KL)