Dongfeng Motor's nine-month profit up to $1.3 bln on China car boom

Dongfeng Motor Group Co., the Chinese partner of Nissan Motor Co., almost doubled nine-month profit as economic growth spurred demand for cars.

Net income rose to 8.61 billion yuan ($1.3 billion) from 4.63 billion yuan a year earlier, the company said in a Hong Kong stock exchange statement today. Third-quarter profit was little changed at 2.08 billion yuan, according to figures derived from the nine-month results.

Dongfeng, the biggest automaker listed in Hong Kong, sold more cars with its foreign partners as rising affluence in the world’s largest car market boosted consumer demand. New model introductions in 2011 will continue to drive earnings, according to Frank Li, a Hong Kong-based analyst at JPMorgan Chase & Co.

“It has a proven track record of growing core earnings both in the upturn and downturn of the cycle,” Li wrote in an Oct. 26 report.

Wuhan, Hubei-based Dongfeng, also a partner of Honda Motor Co. and PSA Peugeot Citroen, has a breadth of competitive products offerings that protect it against downturns in specific segments, Li said.

China Sales

Dongfeng fell 4 percent to close at HK$16.12 in Hong Kong today. The stock has risen 44 percent this year, compared with a 6 percent rise in the benchmark Hang Seng Index.

Auto sales in China may reach 17 million units this year, Zhu Hongren, the Ministry of Industry and Information Technology’s chief engineer, said in Beijing today. Car sales gained 19 percent in September, according to the China Association of Automobile Manufacturers.

Dongfeng’s sales in the first nine months rose 39 percent, outperforming the 31 percent growth in the overall Chinese market, according to Citigroup Inc. analysts Gerwin Ho and Ross Wei. The automaker’s deliveries will continue to grow faster than the car market as the company and its partners add new models, they said.

Operating revenue was 4.64 billion yuan in the first nine months, Dongfeng said today. Yokohama-based Nissan, which makes the Teana sedan with its Chinese partner, plans to introduce a new passenger-car brand, Qi Chen, in 2012 with Dongfeng to help meet demand for cheaper models on the mainland.