WHAT THE BROKER SAID
About a year ago, a waiting list of more than 12 months for Guangzhou Honda's Accord and Fit sedans prompted BOC International to put an 'outperform'' recommendation on Denway Motors. Guangzhou Honda (GH) is Denway's joint venture in the mainland with Honda Motor.
Customers ordering an Accord or Fit then would receive their cars only in early 2005. GH sales reached a record 12,482 units in September last year, up from 9,631 in August. Sales for the first nine months of 2003 stood at 81,181 units, up 76 per cent year on year. Demand for the new Accord sedan had exceeded supply since its launch in January.
BOC had raised its earnings estimate for 2004 to $2.05 billion from $1.72 billion and its estimate for 2005 to $2.30 billion from $1.9 billion. Trading on a estimated 2004 price/earnings ratio of only 10.8 times, Denway remained undervalued. The counter was trading at $3.37 a year ago.
In March Denway said net profit surged 54.5 per cent to $1.68 for 2003.
In September Denway reported a net profit of $924.22 million for the first six months, up 37.1 per cent year on year. Guangzhou Honda's vehicle sales surged 65 per cent year on year to 80,639 units in the first half.
In October Guangzhou Honda posted a 69.9 per cent year-on-year rise in car sales in September and sales for the first nine months jumped 72.1 per cent to 139,750 units. Denway shares closed at $2.80 on Friday.
