Dragon Hill Wuling (305 HK): Get the show on the road- Not Rated

to summarize…

- Sustainable automobile market in 2010 after extension of favourable policies.

- 31.0% top-line growth in 1H backed by SGMW’s 49.2% increase in car sales and DHWL’s own 87.8% jump in specialized vehicle segment.

- Capacity shortage dragged down gross margin by 0.8pcp to 6.2% in 1H but improvement is expected following Qingdao plant’s scaling up.

- Impressing progress achieved in specialized vehicle division by exporting 100 electric cars to America and getting one model chosen by the government.

- Extra funding is needed to meet capital contribution commitment to the JV and, thereafter, will be used for capacity expansion.

- Earnings to hit RMB118.1m in FY12/10F and RMB183.8m in FY12/11F.

- Fair value estimated at HK$1,341.2m, containing 25.0% valuation discount to peers.

DH Wuling: get the show on the road

Dragon Hill Wuling (305 HK): CB loss hides true value - Not Rated

Key points:

- SGMW’s sales volume jumped 50% in 1H and 105.7% in Jul-Aug,

     signaling strong demand for DHWL’s products.

- 16,000 special vehicles sold in 1H and full-year target at 30,000

     Units, up from 20,000 units last year.

- Gross margin narrowed 0.7pcp due to overloaded operation.

     Long-term trend heading up unchanged.

- Bottom line ruined by RMB61.4m non-cash loss. Long-term

     outlook intact.

Dragon Hill Wuling: CB loss hides true value

Dragon Hill Wuling (305HK): Running minivan-Not rated

Key points:

- 90.7% jump in SGMW’s Jul sales to 87,825 cars.

- Strong growth in expectation for DHWL

- Timely financial support from LZWL

Dragon Hill Wuling:running minivan