Dongfeng Group'S IPO Guidance: What Is The Intention Of Returning To A Shares?

After Geely Automobile completed listing guidance on August 28, Dongfeng Motor Group Co., Ltd. (00489. HK, hereinafter referred to as "Dongfeng Group Stock") also accelerated the pace of returning to a shares.

A few days ago, CICC issued a filing report on the guidance work of Dongfeng Motor Group Co., Ltd. in issuing RMB common shares for listing.

The report points out that CICC will provide Dongfeng Group with corresponding support in the aspects of standardized operation, internal control management, financial reporting system construction, raised investment projects, etc. during the guidance period, CICC will gradually implement and improve the listing problems and planning of Dongfeng Group Co., Ltd.

This is also considered by the industry as an important signal for the smooth progress of Dongfeng Group's return to A-share IPO plan. At the same time, it also means that Dongfeng Group's 15 year long return to the A-share market has finally ushered in the dawn.

On July 27 this year, Dongfeng Group Co., Ltd. announced to restart the A-share listing plan, and planned to apply for the initial public offering of RMB common stock (A-share) shares and listing on the gem of Shenzhen Stock Exchange.

"Dongfeng's choice to return to the gem at this time is driven by several factors. On the one hand, it is the enterprise's own development needs. The contradiction between the global automobile industry downturn under the influence of the new crown pneumonia epidemic this year and the huge amount of capital needed for the intelligent transformation of the automobile industry, which urges listed automobile enterprises to seek financing channels; on the other hand, it is driven by policies, and the CSRC issued policies in April this year to relax the policy It is the threshold for overseas listed enterprises to return to the A-share market. " On September 13, in view of the return of Dongfeng Group's shares to a shares, some people in the securities industry said in an interview with the reporter of the 21st century economic report.

It is understood that at the end of April this year, the China Securities Regulatory Commission (CSRC) issued the announcement on the relevant arrangements for the listing of pilot red chip enterprises in China, which adjusted the market value requirements of overseas listed red chip enterprises to meet one of the following two standards: the market value is no less than 200 billion yuan; the market value is more than 20 billion yuan, and it has independent research and development, international leading technology, and scientific and technological innovation ability Strong, in the industry competition in a comparative advantage.

Lowering the market value threshold for overseas listed red chip enterprises to return to A-share listing will undoubtedly create favorable policy conditions for Dongfeng Group's shares to return to A-share market.

As of September 14, the market value of Dongfeng Motor's shares which landed on the Hong Kong Stock Exchange in December 2005 was about HK $44.373 billion.

Race to the mainland for financing

"Good policy, return to A-share market financing, for Dongfeng and Geely, can do some things." On September 10, Cao he, President of quanlian auto Investment Management (Beijing) Co., Ltd., said in an interview with the reporter of the 21st century economic report.

In fact, before Geely and Dongfeng, there were three "a + H" vehicle manufacturing enterprises in the domestic capital market, namely BYD, GAC group and great wall motor.

The research report released by Guotai Junan points out that Dongfeng Motor is relatively weak in the passenger car market, and its sales volume fluctuates greatly under the drag of its own brands and French brands. Weak product line and competitiveness are the main reasons for the slow growth of passenger cars.

The report points out that A-share issuance is basically beneficial to the company, because the raised funds will be mainly used for the development of new energy vehicles, new technology projects and digital platform projects. In addition, due to the impact of the new crown pneumonia epidemic, automobile manufacturers generally raise funds from different ways. Therefore, the proposed IPO in Shenzhen Stock Exchange will supplement its working capital and expand its financing platform.

Previously, Dongfeng Group shares pointed out in the announcement that the number of a shares to be issued this time does not exceed 957 million shares, with a par value of RMB 1 per share, and the issue price will be determined in the future. Assuming that the issue price is the same as the last trading day (September 14), the return of a shares will raise about RMB 4.3 billion.

For the purpose of the raised funds, Dongfeng said that after deducting the issuance costs, the fund raised by the A-share IPO is intended to be used for the new brand high-end new energy passenger vehicle project, the new generation automobile and prospective technology development project, the digital platform and service construction project, and the supplementary working capital.

It is worth noting that three days after Dongfeng Group announced its return to A-share, the new high-end brand of Dongfeng Motor was officially released.

In the view of the industry, Dongfeng Group's choice of returning to a shares at this time is conducive to further optimizing the capital structure and replenishing the huge amount of capital needed for the transformation of Landu brand and "new four modernizations".

However, some people in the industry pointed out that if Dongfeng's intention to return to the gem is only to create a high-end new energy vehicle brand lantu, then the good may be hedged by the operational risk of Landu project, which is not conducive to the long-term development of Dongfeng Group, and even affect the overall development process of Dongfeng.

"Getting a large amount of money through listing is only one aspect. More importantly, with the new forces of car making in the second half of this year, Hezhong automobile and Weima automobile have successively prepared to IPO on the science and technology innovation board, which leaves Dongfeng and Geely with few opportunities. We must seize the policy dividend and return as soon as possible." Cao he told reporters, "similar to the IPO route of new auto manufacturing forces, the return of Dongfeng is also to build momentum by launching a new brand closely related to forward-looking technologies such as the" new four modernizations ", more to attract investors' attention

"Platoon and deployment" to accelerate business recovery

"Uncertain, not optimistic, upgrading, shuffling, are Dongfeng's four judgments for the future of the auto market." On August 14, Tang Teng, deputy general manager of Dongfeng strategic planning department, said at the 2020 auto forum.

In the view of the industry, facing the challenges brought by the new round of automobile industry revolution, Dongfeng Group's A-share listing at this time is an important measure to deal with market changes, and also conducive to the company's future growth and business development.

In the first half of this year, Dongfeng Group, which is located in the center of Xinguan pneumonia epidemic, suffered a major blow to its business. Among them, the sales volume and revenue of passenger car sector are greatly affected. According to the data, Dongfeng Group sold 882300 passenger cars in the first half of the year, a year-on-year decrease of 22.2%, and a sales revenue of 7.606 billion yuan, a year-on-year decrease of 43.9%. Among them, DPCA, Dongfeng Liuqi, Dongfeng Nissan, Dongfeng Honda and other plates have declined to varying degrees.

In the mid year report, Dongfeng Group Co., Ltd. mentioned that the performance decline was mainly affected by the epidemic situation in the first quarter. After the recovery in the second quarter, it also deepened the cooperation with foreign joint venture partners in technology, products and services, brand image and management mode, which brought about brand strengthening and business performance improvement. The company will deepen the research and development of new energy vehicle products and seize the market share.

In order to speed up the business recovery, in addition to speeding up the IPO of gem, Dongfeng Group seized the market share of passenger cars through intensive "platoon arrangement".

Facing the current situation of Dongfeng's independent passenger car business, Dongfeng passenger car has realized the importance of concentrating resources and strength to develop independence. On June 10, Dongfeng Group integrated the business sector, which was composed of Dongfeng passenger cars, Dongfeng Liuqi, Dongfeng Xiaokang, Dongfeng Qichen and Dongfeng h business division (Landu brand) to form "Dongfeng independent passenger vehicle business group".

As the key of Dongfeng Group's independent business, the future development of Landu is very important. "Lantu has undertaken a dual mission within Dongfeng, one is the mission of Dongfeng brand upward, and the other mission is to explore how the state-owned enterprises can create a flexible and truly competitive mechanism." On September 8, Lu Fang, CEO & CTO of Lando automotive technology company, said.

According to the plan, starting from 2021, Lando will launch at least one new car every year. In the next 3-5 years, its product line will cover many new energy products such as cars, SUVs, MPVS, etc.

At the same time, before and after the listing guidance record, Dongfeng sent three personnel transfer information within five days, involving Dongfeng Fengshen, Dongfeng Dongfeng Nissan and other passenger car core plates.

Among them, on August 28, Dongfeng Group announced that Yan Hongbin, deputy general manager of Dongfeng passenger car company, was transferred back to the group, and Li Jinnan, former director of commodity development department, took over the post of deputy general manager; on September 2, DPCA announced that Li Jun would no longer be the executive deputy general manager and Secretary of the Party committee of DPCA, and Chen Bin would take over the post. Also on September 2, Dongfeng Group announced that Zhou Xianpeng, executive vice president of Dongfeng Motor Co., Ltd., and Chen Hao, deputy general manager of Dongfeng Nissan, were appointed as the general manager assistant of Dongfeng Motor Group Co., Ltd.

In the view of the industry, this personnel transfer is not only the rejuvenation of management cadres, but also the hope of Dongfeng Group to copy the experience of the strong plate to all passenger car enterprises, so as to realize the recovery and development of the passenger car sector.