CHINA’S AUTO MARKET REMAINS IN FAST LANE
COMPANY TO WATCH
China’s love affair with the automobile shows no sign of cooling. The world’s most populous country is also the fastest-growing new-car market, with sales increasing at a rate of about 18% annually.
Wuhan-based Dongfeng Motor, which has stakes in three Chinese automobile joint ventures, has demonstrated an ability to grow faster than the market, according to Citi, which initiated coverage of the company in August with a “buy” rating.
Dongfeng Motor listed a 30% stake on the Hong Kong Stock Exchange in December 2005 and is majority-owned by the Chinese government.
“Dongfeng is our preferred large-cap exposure to China’s car market among Hong Kong-listed China stocks,” Citi analysts say. The company has a full line of passenger vehicles, and its numerous joint ventures enable it to cover various market segments.
Dongfeng has formed joint ventures with Nissan, Honda Motor, PSA Peugeot Citroën and Yueda Kia Automobile, among others. Besides vehicles and parts. Dongfeng makes vehicle-manufacturing equipment, provides auto-financing services, operates an insurance agency and sells used cars.