The Zhitong Finance app learned that UBS released a research report stating that it maintained the “neutral” rating of Dongfeng Group (00489) and lowered the target price from HK$4.6 to HK$4.2. Meanwhile, due to poor performance in the first half of the year and the deterioration of joint venture business, the earnings per share forecast for 2023-2025 was lowered by 59% to 69%. While the stock faces fundamental challenges, any form of shareholder return could lead to a revaluation of the stock price.

According to the bank, Dongfeng Nissan and Dongfeng Honda, two major profit contributors under Dongfeng, continue to face challenges, and both market share and profits are declining. Although the company's net cash and financial assets are double the current market value, management has not indicated plans to increase shareholder returns. Meanwhile, the company is investing in self-branded electric vehicles, but in the fierce market competition, these electric vehicles lack the visibility to generate profits. However, the company's market account ratio valuation is at a significant discount compared to its peers in the industry. Therefore, the stock's relatively low valuation makes the bank not overly bearish.