Dongfeng shares "return", Dongfeng Group accelerates resource integration

A few days ago, Dongfeng Motor Co., Ltd. (hereinafter referred to as Dongfeng Co., Ltd.) issued an announcement stating that the company's controlling shareholder Dongfeng Motor Co., Ltd. (hereinafter referred to as Dongfeng Co., Ltd.) is discussing with Dongfeng Motor Group about the transfer of the equity it holds.It is reported that after the completion of the equity transaction, Dongfeng will be separated from Dongfeng Co., Ltd. and become an A-share listed company directly controlled by Dongfeng Motor Group.

First, let's briefly introduce the two companies mainly involved in this article.According to official information, Dongfeng Co., Ltd. is a light commercial vehicle company exclusively initiated by Dongfeng Motor. It was established on July 15, 1999. Only ten days after its establishment (July 27), Dongfeng Co., Ltd. was officially listed on the Shanghai Stock Exchange. , to achieve A-share listing.Dongfeng Co., Ltd. is a joint venture company jointly established by Dongfeng Motor Group and Nissan Motor. It was formally established on June 9, 2003 with a registered capital of 16.7 billion yuan. Both Chinese and foreign shareholders hold 50% of the shares.

Dongfeng Motor Headquarters, picture source: Dongfeng Motor Group

Why is the independent business controlled by the joint venture company?

Here is a more interesting question. Dongfeng shares were originally an asset of Dongfeng Motor Group, but why was it controlled by the joint venture company Dongfeng Co., Ltd.?

The answer is actually quite simple. In the joint venture agreement between Dongfeng Motor Group and Nissan Motor, Nissan mainly injects capital in cash, while Dongfeng Motor mainly injects stock assets such as automobiles and auto parts.At that time, Dongfeng Motor Group injected its shares in two listed companies, Dongfeng Shares (600006) and Dongfeng Technology (600081), into Dongfeng Co., Ltd.

For Dongfeng Motor, the benefits of doing so are mainly reflected in two aspects. One is to avoid excessive cash flow pressure (the overall profitability of Dongfeng Motor at that time was not particularly ideal); At that time, the largest automobile joint venture project in China, by "packing" its assets to Dongfeng Co., Ltd., Dongfeng Motor also wanted to rely on the joint venture company to revitalize these assets.

Statistics show that in the nearly 20 years since its establishment, Dongfeng Co., Ltd. has not only introduced a variety of passenger vehicle products from Nissan, Infiniti and other brands, but also introduced its own management concepts and production standards into its commercial vehicle projects.In the official caliber, the current light vehicle platform of Dongfeng Co., Ltd. has been fully imported into Nissan's development process. During the entire development process, Nissan's standards are implemented, and the products can meet Nissan's global indicators.

The product lineup of Dongfeng Co., Ltd., picture source: Dongfeng Co., Ltd.

After years of development, Dongfeng is now a leader in the domestic light commercial vehicle market, especially in the light truck market, and has always been a member of the first echelon in the market segment (in the domestic light truck market in 2021, The annual sales volume of Dongfeng Co., Ltd. ranked second after Foton.However, in the light bus market, Dongfeng has not yet entered the mainstream.Jiangling and Datong are the two leading players in the domestic light passenger vehicle market. Compared with Dongfeng, there is still a big gap.

According to the 2021 financial report released by Dongfeng, a total of 182,700 vehicles will be sold in 2021, a year-on-year increase of 6.56%.Among them, the annual sales volume of light truck products was close to 160,000 units, a year-on-year increase of 3.68%. Although the sales volume of light passenger vehicles was only 16,500 units, the year-on-year increase was as high as 113.55%.During the reporting period, Dongfeng achieved a total revenue of 15.55 billion yuan, a year-on-year increase of 13.23%, and a net profit of 372 million yuan, a year-on-year decrease of 32.84%.

As for the reason for the sharp increase in revenue but the sharp decline in profitability, the main reason is that due to factors such as rising raw material prices and chip shortages, the gross profit of Dongfeng's main business has dropped significantly.In addition, the implementation of the new domestic blue card policy has brought a considerable impact on the light commercial vehicle market. In order to adapt to the more intense market competition, the increase in related sales expenses of Dongfeng Co., Ltd. has also brought about an increase in operating costs.

Why is Dongfeng Co., Ltd. "returning" now?

According to the data, before the equity transaction was officially approved, Dongfeng Co., Ltd. was still the controlling shareholder of Dongfeng Co., Ltd., holding more than 60% (60.1%) of the latter's shares.

Although the profitability of last year has declined, the main reason is that the overall environment of the industry has undergone relatively large changes. For Dongfeng, its own operating conditions have not experienced much problems, and it is still the domestic light commercial vehicle market. top-ranked companies.Why all of a sudden, Dongfeng shares have to be transferred to Dongfeng Motor Group by Dongfeng Co., Ltd.?

Dongfeng's light commercial vehicle production line, photo source: Gasgoo

At present, the enterprise official has not made a clear statement, but the industry generally believes that the equity transfer plan of Dongfeng shares is likely to be related to the reform of central enterprises.

Peng Huagang, secretary-general and spokesman of the State-owned Assets Supervision and Administration Commission of the State Council, previously stated that since the 18th National Congress of the Communist Party of China, the restructuring of 46 central enterprises has been completed.Next, in the process of optimizing the layout of the state-owned economy and structural adjustment, professional integration is still an important starting point, and it is necessary to build an advantageous enterprise with more focused main responsibilities and main business, clearer business structure, and more prominent core capabilities.

The reform of central enterprises is a long-term process.In the automobile industry, there have been many asset reorganizations among large enterprises more than ten years ago. The merger of AVIC-related automobile enterprises such as Hafei and Changhe into Changan Automobile is a relatively well-known case of merger and reorganization of automobile enterprises.In 2009, under the leadership of relevant departments, Hafei and Changhe were allocated to China Changan by the AVIC Department.It’s just that the result of the reorganization of the car companies was not ideal. After the reorganization of Changhe and Hafei, Changan Automobile did not give too much resources to the two companies, which caused Changhe and Hafei to fall into the predicament of weak follow-up development, and successively cooperated with the two companies. Changan Automobile branch.

However, it is also based on the previous unsuccessful experience. In the reform of central enterprises in recent years, the factor of "lalang matching" is less, and more is based on the transformation and upgrading of enterprises. The emphasis is on improving quality and efficiency, promoting Industry structure optimization.

For Dongfeng Motor Group, the reorganization of its assets has actually started many years ago.

In June 2017, Dongfeng Co., Ltd. once "spun off" its holding company, Zhengzhou Nissan, and transferred 51% of the equity of Zhengzhou Nissan to the controlling shareholder Dongfeng Co., Ltd. at a price of 787.5 million yuan (before this equity transfer, Dongfeng Co., Ltd., Dongfeng Co., Ltd. and Nissan China holds 51%, 28.65% and 20.35% of Zhengzhou Nissan, respectively.)

In 2019, Dongfeng Co., Ltd. began to operate and injected its parts group business into Dongfeng Technology (Dongfeng Technology absorbed and merged Dongfeng Auto Parts Group by issuing shares), and realized the overall listing of the sector business.In September 2021, Dongfeng Technology issued an announcement stating that the above-mentioned major asset reorganization project successfully completed the asset delivery, and Dongfeng Technology officially became a company with "five core technology systems" (brake and intelligent driving system, cockpit and body system, thermal management system). , powertrain technology system,new energyelectric drive system) listed company.

The equity transfer of Dongfeng shares can also be seen as a signal that Dongfeng Motor Group is accelerating the restructuring of its joint venture business.

In the past two years or so, Dongfeng Motor Group ended its joint venture project with Renault and put its Dongfeng Yueda Kia shares up for sale. The relationship with PSA Group has also undergone new changes (there have been many rumors that Dongfeng Motor Group has According to the news that the automobile group is going to sell its shares of Stellantis, the two brands under the joint venture company Shenlong Automobile also have signs of "separation". According to the previously reported "two rooms and one hall" plan, two The brand will be dominated by Chinese and foreign shareholders respectively).In this context, the “slim down” for Dongfeng Limited is obviously in line with the recent major moves of Dongfeng Motor Group.

In addition, the "recovery" of Dongfeng shares, an A-share listed company, is directly managed by Dongfeng Motor Group, which may also help Dongfeng Motor Group to sprint for A-share listing as a whole (Dongfeng Motor Group Co., Ltd. is a Hong Kong-listed company. The announcement stated that it plans to apply for an initial public offering of A shares).