DONGFENG GROUP(HK:00489) Mei Ri Jing Ji Xin Wen·2025-08-20 12:48Core Viewpoint - Dongfeng Motor Group is selling a 50% stake in Dongfeng Honda Engine Co., Ltd. to optimize its fuel vehicle asset structure and accelerate its transition to new energy vehicles (NEVs) amid increasing market challenges in China's NEV sector [1][2] Group 1: Company Actions - The stake sale is currently in the pre-listing phase, with a deadline for bids set for September 12 [1] - Dongfeng Group aims to support Honda's automotive strategy in China through this divestment, which will not affect the operations of Dongfeng Honda [1][2] - Dongfeng Honda Engine Co. was established in 1998 as a joint venture between Dongfeng Motor and Honda Motor Co., focusing on developing and producing engines for vehicles [2] Group 2: Market Context - The market share of joint venture brands, including GAC Honda, has been declining due to the rise of domestic brands, with GAC Honda's sales dropping by 25.63% year-on-year in the first half of the year [2] - GAC Honda's sales fell from a peak of 780,000 units in 2021 to 470,000 units in 2024, with net profit decreasing from 12.4 billion yuan in 2020 to 1.8 billion yuan in 2024 [2] Group 3: Industry Trends - The traditional fuel vehicle market is shrinking, while the NEV market is expected to grow significantly, with a forecasted increase of nearly 30% in wholesale sales to 15.48 million units by 2025 [3] - Major automakers, including Dongfeng Group, are adjusting their production capacities in response to the changing market dynamics, with Honda China planning to close two production lines to accelerate electrification [3] Group 4: Financial Performance - Dongfeng Group's total vehicle sales in the first half of the year were 823,900 units, a year-on-year decline of approximately 14.7%, while NEV sales increased by about 33% to 204,400 units [4] - The company anticipates a significant drop in net profit for the first half of 2025, projecting a range of 30 million to 70 million yuan, a decrease of approximately 90% to 95% compared to the same period in 2024 [5]