BBSP Equity Asia Weekly Research 24 May 2017

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Morningstar, Inc.

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Equity Bottom-Up

For interim 2016, Dongfeng Motor Group, or DFM, reported profit attributable to shareholders of CNY 6.8 billion, down 2% year on year. Excluding the impact of currency gains and losses, earnings were up 7% year on year, slightly above our estimate, but mainly boosted by higher associates contribution from PSA Peugeot Citroen. Earnings were robust for joint-venture brands with Japanese manufacturers, but were insufficient to offset declines in JV brands with PSA and in proprietary brands. We have adjusted our volume growth assumption downward, with little impact on our valuation.In July, DFM's passenger car sales volume was up 14% year on year, the fastest pace for the year to date. After the share price corrected more than 15% in August, the company is now attractively priced at 5 times projected 2016 earnings. We expect DPCA to see some improvement in sales during the fourth quarter, as the JV is scheduled to launch several new models in September.Analyst: Phillip Zhong

For interim 2016, Dongfeng Motor Group, or DFM, reported profit attributable to shareholders of CNY 6.8 billion, down 2% year on year. Excluding the impact of currency gains and losses, earnings were up 7% year on year, slightly above our estimate, but mainly boosted by higher associates contribution from PSA Peugeot Citroen. Earnings were robust for joint-venture brands with Japanese manufacturers, but were insufficient to offset declines in JV brands with PSA and in proprietary brands. We have adjusted our volume growth assumption downward, with little impact on our valuation.In July, DFM's passenger car sales volume was up 14% year on year, the fastest pace for the year to date. After the share price corrected more than 15% in August, the company is now attractively priced at 5 times projected 2016 earnings. We expect DPCA to see some improvement in sales during the fourth quarter, as the JV is scheduled to launch several new models in September.Analyst: Phillip Zhong

Results a Beat on Higher Associates Income From PSA