Commercial vehicle sales are optimistic. Driven by the commercial vehicle business, Dongfeng Motor's sales rose 8.3% in April 2020 compared with the same period a year earlier. Commercial vehicle sales increased by 28.2% year-on-year, of which heavy vehicle sales increased by 45.1% year-on-year. In view of the fact that infrastructure investment has become an important part of the government's efforts to alleviate the economic impact of the novel coronavirus epidemic, we expect sales momentum to be maintained. We expect both Dongfeng commercial vehicles and Dongfeng Liuqi (commercial vehicles) to meet their sales targets, corresponding to year-on-year growth of 18.3% and 11.5%, respectively.

We raised shareholder profits by 5.6% / 4.4% / 2.3% respectively from 2020 to 2022. After adjustment, we expect shareholder profits to fall by 15.2% year-on-year in 2020, but grow by 9.8% and 4.8% respectively from 2021 to 2022.

The company's share price rose on strong commercial vehicle sales growth and expectations, with an one-month relative return of 7.3%. The company's fundamentals have benefited from the heavy reliance on commercial vehicle sales, so we have raised our profit forecast for the forecast period. We upgraded Dongfeng Motor's investment rating to "Collection" and raised its target price to HK $6.10, equivalent to 4.4 times 2020 price-to-earnings ratio and 4.0 times 2021 price-to-earnings ratio. We have also given a higher price-to-earnings ratio because of a better industry atmosphere and a more optimistic outlook for the company. Our valuation is about 1 standard deviation of the average, which we think is reasonable.