DFG released its 1H20 results. 1H20 top-line up by 4% YoY to RMB50.6bn while bottom-line dropped by 64% YoY to RMB3.0bn (1Q-RMB0.3bn /2Q+RMB3.3bn). EPS was RMB0.35, interim DPS was RMB0.1. Given that the work resumption pace in Hubei was slower than other parts of China and DFG took great social responsibilities as an SOE, the decline of bottom-line was within market expectation in 1H20.
- DFG sold 1,14mn units in 1H20, down 16.7% YoY. In 1H20, the Company achieved revenue of RMB50.6bn, a decline of 4% YoY. PV sales were 882K units, a decrease of 22.2% YoY. Revenue from the PV segment was RMB7.6bn, a decrease of 43.9% YoY. Benefiting from strong performance in heavy-truck sales (+19.1% YoY in 1H20), CV sales reached 262K units, an increase of 9.0% YoY. Revenue from the CV segment was RMB39.3bn, an increase of 21.5% YoY. With the increase of the financial penetration rate in retail sales (38% in 1H20 vs 35% in 1H19), the Company's financial segment achieved total revenue of RMB3.5bn, an increase of 40% YoY. In 1H20, a DTA write-off of DPCA reduced DFG’s investment income by RMB440mn. In the meanwhile, an impairment loss from PSA equity investment due PSA stock price dropped in 1H20 further dragged down DFG’s bottom-line by RMB1.07 bn.
- We forecast DFG will achieve a total sales volume of 2.7mn vehicles in 2020E, a decline of 7% YoY. It implied that DFG will achieve a 1% YoY growth in 2H20E (PV +0% YoY/CV+3%YoY) given 1) overall market recovery and 2) new model rollout in 2H20E. We raise our revenue forecast to RMB104bn to reflect strong CV sales growth. At the same time, we revised down our NP forecast to RMB8.1bn to reflect the investment impairment losses and the decline in shared profit from JVs. Our revised NP forecast suggests that DFG’s bottom-line will grow 15% YoY in 2H20E.
- DFG officially released the VOYAH (岚图) on 29 Jul, targeting as a high-end NEV brand. The Company plans to invest RMB11bn in product R&D and sales channel development in the next five years. VOYAH has a team of more than 700 people now and will operate relative independently within DFG. It has seven new models in the pipeline, among three of which have entered into R&D stage. The first model (SUV) will launch in 2021E while sedan/MPV will roll out in 2022. We believe VOYAN will consolidate all the cutting-edge technology that DFG accumulated and will improve the brand awareness of DFG.
