Xin Lang Cai Jing·2025-11-10 12:25Core Viewpoint - GAC Group is advancing its capital operations through GAC Honda by acquiring a 50% stake in Dongfeng Honda Engine and increasing its capital to achieve full ownership, thereby enhancing its supply chain for core components [1][2]. Group 1: Equity Acquisition and Capital Increase - GAC Honda signed a contract with Dongfeng Motor Group on October 30 to acquire a 50% stake in Dongfeng Honda Engine for 1.172 billion RMB (approximately 1.287 billion HKD) [2]. - To achieve full ownership, GAC Honda will increase its registered capital from 541 million USD to 867 million USD, with a total capital increase of 326 million USD (approximately 2.544 billion HKD) [2]. - GAC Group will contribute 50% of the capital increase, amounting to 163.1 million USD (approximately 1.172 billion RMB), while Honda and Honda China will contribute through their existing stakes [2][3]. Group 2: Financial Performance and Valuation of Dongfeng Honda Engine - Dongfeng Honda Engine's revenue is projected to improve significantly, increasing from 9.566 billion RMB in 2023 to 17.852 billion RMB in 2024, with a turnaround from a net loss of 228 million RMB to a profit of 84 million RMB [4]. - The independent valuation of Dongfeng Honda Engine shows a net asset book value of 2.029 billion RMB and an assessed value of 2.345 billion RMB, reflecting an increase of 316 million RMB (15.60%) [3][4]. Group 3: Strategic Implications and Financial Impact - The transaction aims to enhance GAC Honda's integrated operations in the engine sector, improving supply chain stability and reducing transaction costs [4]. - Post-transaction, Dongfeng Honda Engine will be included in GAC Group's consolidated financial statements, supporting the group's transition towards smart and electric vehicle production [4].