Dongfeng Automobile Announces its Holding Increase Plan, Profitability May Increase This Year

DongfengAuto has announced on 17 March that the legal responsibilities of persons Dongfeng Automobile Company of Dongfeng Automobile Co Ltd has increase holding 444.431 thousands shares of company, which take 0.0222% of its total shares.

Besides, the company announces that Dongfeng will keep increase holding its stocks in the next 18 months, which will limit within 5% of its liquid stocks.

Dongfeng Auto does business of light pickup and engine, which is just a small plate of huge Dongfeng Company family. Dongfeng Company indirectly holds 33.43% shares of Dongfeng Co Ltd by Dongfeng Automobile Group Co Ltd. From company structure perspective, Dongfeng Auto is sun of grandson of Dongfeng Company. Dongfeng Company directly buy share this time. It means the company pays high attention on this plate.

According to statistics, Dongfeng Co Ltd holds 60.1% before the stock buying. With a high shareholdingpercentage, Dongfeng Co Ltd still wants to increase its shareholding. It means that the company definitely has solid confident on the future value. The company explains that the increase holding is causes of “based on the value of the company, and the confident for the future development and stock price at this moment.”On 17, end price of Dongfeng was 2.98 CNY per share, which is lower than its increase holding upper limit.

From fundamentals perspective, the company has experience a lot of adjustment since year 2013. It includes management adjustment, which include general manager. Besides, development strategy has changed as well. And inventory, channels and supply chain have reorganized according to “cost cut & efficiency improve”. Besides, it sold low efficiency Zhengzhou Plant at the end of last year.

Insider points out that Dongfeng have its potential to welcome its profit inflection in year 2014 with the foundation of last year. ZHANG Honglei, analyst of Dongxing Security points out that light pick up business of Dongfeng has less than 10% profit, but as high as 12% operation fee. It encumbers company entire profitability. The company will increase its sales by cut cost, integration modes, product upgrade and cut fixed asset investment.

According to the latestproduction and sales statistics, sales of Feb of Dongfeng are 15,918, which have increased 30.19% over last year. From Jan to Feb this year, company automobile sales accumulated to 33,067, which have increased 7.56%. Besides, company engine sales are 13,369. The first 2 months, engines sales are 26,332, which have increased 4.55%.