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Investing.com - HSBC upgraded Dongfeng Motor (HK:0489) (OTC:DNFGY) from Hold to Buy and raised its price target to HK$13.00 from HK$4.80 following the company’s privatization announcement. The stock has shown remarkable momentum, with InvestingPro data showing an 80.77% surge in the past week alone.
On the evening of August 22, Dongfeng announced plans to privatize itself while its electric vehicle subsidiary VOYAH will apply for a separate listing on the H-share market. The transaction remains subject to shareholder and regulatory approvals. With a market capitalization of $9.46 billion and trading at just 0.3 times book value, InvestingPro analysis suggests the stock may be undervalued.
Under the proposed offering, existing Dongfeng shareholders would receive a per-share cancellation price of HK$6.68 in cash and a distributed VOYAH share valued at approximately HK$4.17, totaling around HK$10.85 per share.
Dongfeng H shares were suspended from trading on August 8 and resumed trading Tuesday. HSBC anticipates the share price will rise rapidly on this news.
The new price target represents significant upside from previous valuations, reflecting HSBC’s positive outlook on the restructuring plan and the separate listing of the company’s EV subsidiary.
In other recent news, Dongfeng Motor announced a corporate restructuring plan that has caught the attention of investors. The company revealed plans to delist from the Hong Kong Stock Exchange while simultaneously spinning off its Voyah brand electric vehicle business for a separate listing on the same exchange. This announcement came after a two-week trading suspension and was made public after the market closed. In response to these developments, JPMorgan upgraded Dongfeng Motor’s stock rating from Underweight to Overweight. The firm also significantly raised its price target from HK$3.90 to HK$11.00. These recent developments are pivotal for investors keeping an eye on Dongfeng Motor’s strategic moves in the market.
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