Dongfeng Group shares warned that first-half net profit fell about 60 percent year on year.

     On August 24, Dongfeng Group Corporation [00489.HK] issued a profit warning, saying that its net profit for the first half of the year ending June 30, 2020 will be about 60% lower than the same period in 2019.

      The shares of Dongfeng Group explained that the expected decline in profit was mainly due to the novel Coronavirus outbreak at the beginning of the year, which affected the performance operation and consumer spending of Chinese enterprises. Dongfeng Group Is at the center of the epidemic. In the first quarter, it was significantly affected by the epidemic. Moreover, the overall resumption of work and production was one month later than that of the industry, which led to a decline in profits.

      After the profit warning announcement, dongfeng Group shares were affected. Dongfeng shares opened at HK $5.42 on Aug 24, down 2.91% from HK $5.33 as of press time.

     Bai Yiyang, head of research at CWC International, said dongfeng's first-half performance had been expected to decline as the resumption of work and production in Hubei province was slower than nationwide.

     However, Dongfeng Group shares, with the outbreak of the second quarter to ease, and at the same time the group around the production and operation gradually returned to the normal level, effectively slow down the first half of the trend of profit decline.

    In the first quarter of this year, the operating income of Dongfeng Group was 2.066 billion yuan, down 33.72% compared with 3.117 billion yuan in the same period last year.

            Dongfeng Group share sales have gradually recovered.

      In July, Dongfeng Group sold 248,000 vehicles, a year-on-year increase of 12.1%; In the january-July period, sales of new cars totaled 1.392 million, down 12.7 percent from a year earlier.

     Bai Yiyang pointed out that the sales volume of Dongfeng Group shares in the first half of the year showed the pattern of "business strong by weak", and the overall market trend is more consistent.

     The sales volume of Commercial vehicles of Dongfeng Group in July reached 49,000 units, up 57.1% year on year. From January to July, the total sales volume was 312,000 units, up 14.6 percent year on year.

     Passenger car sector sales in July 198,000 new cars, slightly increased by 4.7% year on year; From January to July, sales totaled 1.081 million units, down 18.4% from a year earlier.

     China's commercial vehicle market sold 447,000 vehicles in July, up 59.4% from a year earlier, according to the China Association of Automobile Manufacturers. From January to July, the sales volume totaled 2.832 million units, up 14.3% year on year.

     The passenger car market sold 1.665 million new cars in July, up 8.5 percent year on year. From January to July, the total sales volume was 9.533 million, down 18.4% year on year.

     Bai yiyang pointed out that due to the complex shareholding structure of dongfeng group, and the lack of hot style and highlights in the passenger vehicle product line, the capital market pays less attention to dongfeng and its valuation multiples than some competitors in the same industry.

    At present, the total market value of Dongfeng's shares is about 45.752 billion Hong Kong dollars (40.847 billion yuan), compared with the total market value of rivals such as Great Wall Motor, which is about 126.545 billion yuan, and SAIC motor, which is 218.247 billion yuan.

     Bai Yiyang said, in the second half of the overall market recovery background, dongfeng Group shares market valuation has the opportunity to improve. In the medium and long term, dongfeng Group will get additional funds for the development of its new energy passenger vehicles as it returns to the technology innovation board for listing.

    On the evening of July 27, Dongfeng Group Announced that the company plans to apply for the initial public offering of RMB ordinary shares (A shares) and list on the Gem of Shenzhen Stock Exchange (HEREINAFTER referred to as "Shenzhen Stock Exchange").

Dongfeng Group intends to issue A shares of no more than 957,346,666 shares.

      The funds raised from the A-share issuance and listing of Dongfeng Group are mainly used in four aspects: high-end new-energy passenger vehicle projects of brand new brands, new-generation vehicles and forward-looking technology development projects, digital platform and service construction projects, and supplementary operating funds.

     On July 29, Dongfeng Launched its high-end electric brand LAN To Wuhan, marking the world debut of its first concept car, the VOYAH I-Land.

     LAN Tu automotive has formulated the development plan for the next 3-5 years to achieve the coverage of sedan, SUV, MPV, crossover, high-performance vehicles and other market segments. Starting in 2021, the Arashi will launch no less than one new model each year.

    Bai Yiyang believes that if "LAN map" can help Dongfeng Company achieve breakthrough in the new energy track on the product, then dongfeng Group shares will achieve performance growth and market value revaluation in the future.