Pick#3: The best automaker to buy now. Not Tesla nor NIO !

It is Dongfeng Motor !

Dongfeng Motor Corporation is a Chinese state-owned automobile manufacturer headquartered in Wuhan, China. It was established in 1969 and is one of the largest automobile manufacturers in China. It is considered one of the “Big Three” automakers in China.

Dongfeng Motor was originally established as a Second Automobile Works in 1969 as a joint venture between China and Japan with over 180,000 employees.. The company was initially focused on producing commercial vehicles and later started producing passenger vehicles. Over the years, Dongfeng Motor has formed partnerships with various international companies, including Nissan, Honda, and PSA Peugeot Citroën.

Dongfeng Motor has a number of manufacturing facilities located across China. The company’s production facilities are located in Wuhan, Shiyan, Xiangyang, Zhengzhou, and Guangzhou.

Financial

Below shows China market share owned by Dongfeng as a percentage. On 2006, it was taking almost 0.5% of market share, reached maximum on 2007 at almost 3%, but based on the competitions down and around 2% currently.

Total sales of vehicles is above 3 million a year. Below is yearly production. The company has three commercial vehicle brands: Dongfeng, Chenglong, and Vasol, and its own-brand passenger cars include Dongfeng Aeolus, Dongfeng Forthing, and its premium EV brand, Voyah.

Why we picked Dongfeng ?

During the period of its 14th Five-Year Plan (2021-2025), Dongfeng aimed to increase sales including own-brand passenger cars, and New Energy Vehicles (NEVs), and to capture a market share of more than 16%. The company planned to invest CNY 100 billion in R&D to electrify all new models of its main passenger car brands by 2024. Dongfeng is ahead and already lunched its EV brands. Dongfeng has huge manufacturing variations. Auto manufacturing had been expanded from UK then Japan and we expect China because of the price factors of China-make as well as China economical growth.

Dongfeng plan to build a “vehicle business + high-tech sector + ecosystem service” business to accelerate the transformation into a high-tech company.

Dongfeng has the lowest PE Ratio among all global automakers of only around 2.5 times. Quarterly revenues is increasing and expect to cover for the recent annual drop as shown below.

Price to book is one of the lowest at 1.26 making it one of the safest investments. Its dividend value at current price is about 9% considered very affordable. The share itself had dropped too higher than the company current situations which make it a barging. We picked the Dongfeng tricker OTCMKTS: DNFGY at $22.40. We see it as one of the tickers that can double its value in the coming years.

The latest news about Dongfeng Motor is that the company plans to invest 1 billion yuan (approximately 156 million US dollars) to develop new energy vehicle technologies. The company is also planning to launch over 20 new energy vehicle models by 2025. That shows that Dongfeng Motor is investing in future technology and expanding its product line to meet the growing demand for electric vehicles. It also shows the company’s commitment to sustainable development and reducing its carbon footprint.

Dongfeng had gone very well in Electric Vehicles as required for future balancing between old capabilities and new requirements. Below list of Dongfeng current and future production vehicles.

Conclusion

As per out golden rules, we divided our capital to more than 50 to 100 picks. That will allow us to have varies picks with varies time-frame. As per our own expectation which till now going correct, that we didn’t expect much of up-trend during 2023, so, that will remain a good approach for safe entry.

For our portfolio and as promised to keep full transparency, currently the 2nd Pick CALM got a hit after Stephan’s agency buy down-gradation. This is understandable after the known egg prices ease in US. But we remained confident that CALM is a blue ship that will stand more in future to other index components and could return back up. Belo is the current conditions of the portfolio. At long term that will be balancing after additional picks and cash.

Be tuned for our next pick.

[Dongfeng website]