Shareholders of Dingfeng Group have passed a resolution on the acquisition of Jiashi Development Limited, a financial leasing company dominated by Fujian. We believe that the main reasons why the company will benefit from this acquisition are:

Diversified scope of business-currently Dingfeng Group's leasing business is focused on construction and manufacturing equipment, while Jiashi is mainly focused on tourism and offshore fishing. The acquisition will enable Dingfeng to expand its financial leasing business and customer base. Among them, the offshore fishing industry is strongly supported by the Fujian provincial government. The provincial government aims to increase the number of offshore fishing fleets in Fujian province to no less than 850 by 2020, up 70 per cent from 2014. At present, the average investment per ship is about 20 million yuan, which means that the potential market size is not less than 7 billion yuan.

Scale increase-We expect Dingfeng to have a loan of about 1 billion yuan after the completion of the acquisition in 2015, double the original forecast of 490 million yuan. However, we lowered our net interest rate forecast by 2.7 per cent to about 59.4 per cent, mainly due to an increase in financing costs due to Jiashi's existing 230 million yuan bank loans.

Increase in net asset value-we expect the net book asset value of 2015 to increase to 0.97 yuan per share / 1.54 yuan per share in 2016, which is 49.0% higher than our previous forecast. That means the company is currently trading at a price-to-book ratio of about 3.2 times the forecast price-to-book ratio for fiscal year 15.

Maintain the buy rating and target price HK$10.03-We maintain the target price HK$10.03, which means that HK$3.18 's advisory services (based on 15.0x FY16 price-to-earnings ratio) and HK$6.85 's loan portfolio (based on 3.7x FY16 price-to-book ratio) reflect the strong growth in loan volume.