BIZCHINA / Li Shufu
Automaker Geely plans takeover
(China Daily)
Updated: 2005-01-10 09:59
Geely Group, the Chinese mainland's privately-owned car maker, plans to
acquire all stakes of its Hong Kong-listed arm, Geely Automobile Holdings
Co Ltd.
The National Development and Reform Commission, the nation's economic
regulator, is currently mulling over approval of the move, according to a
senior Geely executive, who wished to remain anonymous.
Based in East China's Zhejiang Province, the group now has an almost 20
per cent stake in Geely Automobile Holdings.
The Hong Kong-listed firm was renamed Geely Automobile Holdings from
Guorun Holdings, a Hong Kong-based investment company, at the beginning
of last year.
"The deal, if comes to fruition, will enable Geely to channel all of its
auto assets into the Hong Kong-listed firm, helping it raise more funds
from the stock market to assist its ambitious expansion plans," said Li
Chunbo, an analyst with CITIC Securities Co Ltd.
The Geely Group and Geely Automobile Holdings now run two car joint
ventures in Shanghai and Ningbo, a port city in Zhejiang Province. Geely
has a 53.2 per cent stakes in both of the two joint ventures, and the
Hong Kong-listed firm has the remainder.
Geely announced last May that it would channel a 90 per cent stake, worth
723 million yuan (US$87.3 million), from its other two car plants in
Taizhou and Linhai in Zhejiang into the two joint ventures.
Zhang Xin, an analyst with Guotai & Jun'an Securities Co Ltd, said this
move indicated that Geely appears to be focusing on the Hong Kong stock
market and is scrapping its attempt to obtain a domestic listing by
purchasing a shell company.
And it follows Geely's two unsuccessful takeover moves over the past two
years.
Last year, Geely failed to take over Northwest Yongxin Chemical Industry
Co Ltd, a Shenzhen-listed paint producer in Northwest China's Gansu
Province.
This came after Geely's plan to acquire Quanchai Engine Co Ltd, a
Shanghai-listed diesel engine producer in eastern Anhui Province, was
foiled by the provincial government in 2003.
The Geely executive said the group aims to sell 120,000 to 130,000 cars
this year. Last year, Geely's sales rose year-on-year by 20 per cent to
more than 100,000 cars.
The group is one of the few Chinese car manufacturers committed to
developing its own brands. Its current product portfolio includes the
low-cost Haoqing and Merrie compact cars, Maple and Ulion small sedans
and the Meirenbao sports car.
Geely's auto sales revenue exceeded 7 billion yuan (US$845.4 million)
last year, up more than 30 per cent from 2003, according to the executive.
The group announced last year that it plans to lift its annual production
capacity to 600,000 cars by 2007, up from the current more than 200,000
units.
Geely, which was previously a motorcycle and real estate conglomerate,
started to produce cars in 1998 and its accumulated car sales reached
270,000 units at the end of last year.
The executive said that the group also aims to quadruple its exports to
20,000 cars this year.
Geely reported a 10-fold jump in exports to 5,000 cars last year.
"The Middle East is currently our main export market, and we will strive
to enter the US market this year," he said.
The group will launch a range of new products during the first half of
this year, including CK-1 and Maple 303 sedans to be produced at the two
joint ventures in Ningbo and Shanghai, added the executive.
But analysts said that Geely, a small player compared with domestic and
foreign heavyweights, will face tougher market conditions due to
increasingly fierce competition in the low-cost car market and generally
slowing car sales in China.
(For more biz stories, please visit Industry Updates)
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