Dongfeng Group rises 6% Citigroup reiterates buy 7.5 yuan

Dongfeng Group, which has announced a recall of more than 150,000 vehicles with an engine malfunction, has climbed 10% this morning and is still up 6.2% to HK $6.51 after the afternoon shock fell, trading 30.3554 million shares.　　Citi issued a report saying that the target price was raised from HK $6.35 to HK $7.5, a premium of 15% over the latest market price. Citi, which raised its earnings forecasts for the 09-11 fiscal year by 11%,19% and 23% per cent, was boosted by higher gross profit forecasts and increased capacity utilization due to rising passenger car unit sales forecasts. At the same time, the target P/E ratio was raised to 12.7 times times the forecast earnings ratio of 12 times times the original 09 fiscal year to reflect a better outlook for the Chinese car market, and it seems to have shrugged off growth since April 2008.　　In turn, China's auto sales in fiscal year 09 rose to 15% from a year earlier, with a forecast of 5%. It said Dongfeng's passenger car sales rose 17% from a year earlier in 4 months, more than 10% of China's overall car sales, 09 years ago. Dongfeng's passenger car sales are expected to continue to grow faster than the overall Chinese car market, thanks to the contribution of the new models. Dongfeng Motor's net profit for the 09-10 fiscal year is expected to increase by 12% and 10% respectively over the previous year.