Glonghui, March 12 | Morgan Stanley issued a report saying that Dongfeng Group recently issued a profit warning, which is expected to change from profit to loss last year, dragging down Dongfeng's stock price by 9.7% yesterday (11th), outperforming the Hang Seng Index's performance on the same day. The group attributed the profit warning to price competition in the industry and increased investment in the NEV business. Damo pointed out that it was mainly due to a 15% year-on-year decrease in the Group's sales last year. The sales volume of the joint ventures Dongfeng Nissan and Dongfeng Honda also declined by 19% and 8.5% respectively, plus one-time value impairment brought about by the transformation of electric vehicles. The bank believes that local electric vehicle brands continue to promote “lower electricity than oil” price competition, which will hurt sales of internal combustion engine models of joint venture brands. It is expected that the group will still face some operating pressure this year. However, since the stock price (which closed at HK$3.06 last day) is significantly lower than the Group's net cash per share (the bank estimates net cash of HK$6 per share), it is expected that continued share buybacks or increases in holdings from parent companies will support the stock price. Furthermore, any clear dividend payment guidelines will have a positive impact on the stock price. Dama gave it a “in sync with the market” rating, with a target price of HK$3.8.