What's newHarmony announced that it will transfer a stake in Green FieldMotor to Harmony Futeng at a consideration of Rmb218mn,lowering its Green Field holding from 87.57% to 54.13%.
CommentsAmbition on lower-end EV business: introducing HongHai and Tencent’s interests to Green Field. After thistransaction, Hon Hai and Tencent will respectively hold 21.87%and 16.17% of Green Field Motor’s equity. The two giants arefirmly tied with Harmony’s two EV entities. The lower-end EVsproduced by Green Field may also get support from Hon Hai andTencent in the future.
Clearer road map of Harmony’s EV plan. We can see fromthis transaction that Harmony’s EV business will in the future beunder Harmony Futeng, an associate held by Harmony, Hon Haiand Tencent. High-end EV business under Futeng and lower-endEV business under Green Field may share some resources andtechnologies in the future.
More active plan ahead. The company also has a plan tointroduce more experienced talent, increase capital and makeGreen Field an independent financing entity.
Valuation and recommendationBefore launch of its EV models, Harmony’s stock price has beendriven by the proceeds of EV business or new events. We believeadding Hong Hai’s and Tencent’s interests in Green Field couldhelp to increase the competitiveness of Green Field products.
We keep our earnings forecast and raise Harmony’s TPby 14% to HK$8.00. Maintain BUY.
RisksEV business performance