DFG released its 1H20 results. 1H20 top-line up by 4% YoY to RMB50.6bnwhile bottom-line dropped by 64% YoY to RMB3.0bn （1Q-RMB0.3bn/2Q+RMB3.3bn）。 EPS was RMB0.35, interim DPS was RMB0.1. Given that thework resumption pace in Hubei was slower than other parts of China and DFGtook great social responsibilities as an SOE, the decline of bottom-line was withinmarket expectation in 1H20.
DFG sold 1,14mn units in 1H20, down 16.7% YoY. In 1H20, the Companyachieved revenue of RMB50.6bn, a decline of 4% YoY. PV sales were 882Kunits, a decrease of 22.2% YoY. Revenue from the PV segment wasRMB7.6bn, a decrease of 43.9% YoY. Benefiting from strong performance inheavy-truck sales （+19.1% YoY in 1H20）， CV sales reached 262K units, anincrease of 9.0% YoY. Revenue from the CV segment was RMB39.3bn, anincrease of 21.5% YoY. With the increase of the financial penetration rate inretail sales （38% in 1H20 vs 35% in 1H19）， the Company's financial segmentachieved total revenue of RMB3.5bn, an increase of 40% YoY. In 1H20, aDTA write-off of DPCA reduced DFG’s investment income by RMB440mn. Inthe meanwhile, an impairment loss from PSA equity investment due PSAstock price dropped in 1H20 further dragged down DFG’s bottom-line byRMB1.07 bn.
We forecast DFG will achieve a total sales volume of 2.7mn vehicles in2020E, a decline of 7% YoY. It implied that DFG will achieve a 1% YoYgrowth in 2H20E （PV +0% YoY/CV+3%YoY） given 1） overall market recoveryand 2） new model rollout in 2H20E. We raise our revenue forecast toRMB104bn to reflect strong CV sales growth. At the same time, we reviseddown our NP forecast to RMB8.1bn to reflect the investment impairmentlosses and the decline in shared profit from JVs. Our revised NP forecastsuggests that DFG’s bottom-line will grow 15% YoY in 2H20E.
DFG officially released the VOYAH （岚图） on 29 Jul, targeting as a highendNEV brand. The Company plans to invest RMB11bn in product R&D andsales channel development in the next five years. VOYAH has a team of morethan 700 people now and will operate relative independently within DFG. Ithas seven new models in the pipeline, among three of which have enteredinto R&D stage. The first model （SUV） will launch in 2021E while sedan/MPVwill roll out in 2022. We believe VOYAN will consolidate all the cutting-edgetechnology that DFG accumulated and will improve the brand awareness of DFG.