Dongfeng Motor Group Sees Strong Run on Stock Market

A Dongfeng Motor Group stakeholder has made a significant profit from a share placement, taking advantage of the firm's recent strong run on the stock market. The unidentified shareholder sold 100 million shares at $3.55 each, a 3.4 per cent discount to yesterday's closing price of $3.675. This comes as the mainland car industry shows signs of recovery, with the sector posting profits of 28.4 billion yuan in the first five months, up 70.8 per cent from a year earlier.

Key Takeaways:

• A Dongfeng Motor Group stakeholder raised $355 million through a share placement, selling 100 million shares at $3.55 each, a 3.4 per cent discount to yesterday's closing price of $3.675.
• The unidentified shareholder took advantage of the firm's recent strong run on the stock market, where the stock jumped 4.25 per cent yesterday, taking its gains to 13.95 per cent since a recent low of $3.225 on June 8.
• Deutsche Bank and CICC arranged the share sale, which was covered in 10 minutes, according to sources.
• Dongfeng has joint ventures with Japan's Nissan and Honda, as well as France's Peugeot Citroen, and has been struggling since the government brought in macroeconomic measures to control an overcapacity problem.
• However, there have been signs of recovery in the mainland car industry since the beginning of the year, with the sector posting profits of 28.4 billion yuan in the first five months, up 70.8 per cent from a year earlier.
• Mainland car sales are likely to jump 74 per cent this year, according to the China Association of Automobile Manufacturers.
• Dongfeng's management expects this year's sales growth to exceed the industry estimate of 10 per cent to 15 per cent, offsetting the impact of price cuts and protecting margins.
• Dongfeng expects its joint venture with Honda to produce 70,000 to 80,000 units next year.
• Dongfeng Motor is among four major Chinese carmakers listed on the Hong Kong stock exchange, along with Denway Motors, Brilliance China Automotive Holdings and Geely Automobile Holdings.
• The company's stock has surged 129.69 per cent since its debut in December last year.

Statistics:

• Dongfeng's earnings for last year plunged 38.4 per cent to 1.6 billion yuan.
• The mainland car industry posted profits of 28.4 billion yuan in the first five months, up 70.8 per cent from a year earlier.
• Mainland car sales are likely to jump 74 per cent this year, according to the China Association of Automobile Manufacturers.
• Dongfeng's management expects this year's sales growth to exceed the industry estimate of 10 per cent to 15 per cent.
• Dongfeng expects its joint venture with Honda to produce 70,000 to 80,000 units next year.
• Dongfeng Motor's stock has surged 129.69 per cent since its debut in December last year.

Sources:

• "Dongfeng Motor stakeholder raises $355m from share placement", A Dongfeng Motor Group stakeholder raised $355 million through a share placement yesterday, taking advantage of the firm's recent strong run on the stock market.
• Deutsche Bank and CICC arranged the share sale.
• China Association of Automobile Manufacturers, Mainland car sales are likely to jump 74 per cent this year, according to the China Association of Automobile Manufacturers.