Auto company seeks listing
By Yu Qiao (China Daily)
Updated: 2004-09-13 08:52

Guangzhou Automobile Group, Toyota Motor's new joint venture partner in South China's Guangdong Province, is expected to go public on the domestic stock market this year.

The company, which launched a 100,000-sedan joint venture with Toyota last week, will enter the A-share market "as early as the end of this year pushed by the Guangdong provincial government," said an executive of Guangzhou Automobile.

But the executive did not reveal the specific venue of the expected listing or how much money will be raised.

"Listing is badly needed for Guangzhou Automobile to get enough capital to facilitate its ambitious expansion plans through co-operation with foreign partners in the increasingly competitive domestic auto market," said Zhang Xin, an auto analyst with Guotai & Jun'an Securities Co.

The company, which is also running a car joint venture with Honda Motors and a bus venture with Isuzu Motors, aims to lift its annual output to 300,000 vehicles next year and to 1 million vehicles by 2010 from 120,000 units last year.

It also expects its sales revenue to reach 200 billion yuan (US$24.2 billion) in 2010, up from 31 billion yuan (US$3.7 billion) last year.

Guangzhou Automobile started to seek a domestic listing in the early 1990s, but the plan was derailed as a result of its heavy losses.

Denway Motor Co Ltd, 41 per cent owned by Guangzhou Automobile, went public on the Hong Kong Stock Exchange in 1993.

Guangzhou Automobile returned to profitability in 2000 mainly helped by strong sales from its joint venture with Honda, which was set up in 1998 and is producing the Accord mid-sized sedan, Fit compact and Odyssey commercial wagon.

Zhang Fangyou, chairman of Guangzhou Automobile, said earlier that the company is expected to report 5.5 billion yuan (US$664.3 million) in profits this year, up from more than 3.8 billion yuan (US$458.9 million) last year.

The company now has total assets of 17.4 billion yuan (US$2.1 billion) and has formed almost 40 vehicle, motorcycle, engine and spare parts joint ventures with foreign partners since 1997.

The joint venture between Guangzhou Automobile and Toyota, with an investment of 3.82 billion yuan (US$461.7 million), will begin producing the Camry sedan during the first half of 2006.

The venture's annual output will grow by 250,000 sedans in coming years.

Guangzhou Automobile also aims to increase its annual motorcycle output to 1 million units next year up from 470,000 units last year.

Guangzhou Automobile is just one of China's major automakers seeking listings as part of efforts to fund future expansion.

Dongfeng Motor Corp, one of China's biggest automakers, plans to go public in Hong Kong later this year to raise more than US$1 billion.

The company hopes to raise its annual sales to 1.7 million vehicles by 2008 from 469,000 units last year.