Home-brand automaker Chery plans IPO in 2008
22/12/2006 16:37
The Chery Automobile Co Ltd, China's noted home-brand carmaker, plans its
initial public offering (IPO) in 2008, possibly choosing both the mainland
A-share market and the Hong Kong market. Chery, which was established nine
years ago in eastern China's Anhui Province, is now one of the few successful
auto companies in China producing cars with Chinese brands. Some analysts had
predicted Chery to launch IPO next year, but the company's unsatisfactory profit
made the decision-makers delay it to 2008. Due to huge outlay in research and
expansion, Chery's profit in 2005 was below 100 million yuan (US$13
million). Chery's profit-earning capacity is expected to be greatly enhanced
from 2006 to 2008, said Yin Tongyao, board chairman of Chery. Chery is also
afraid of being controlled by other capitals after its public offering. Some
international funds having negotiations with Chery expressed their wish to hold
the majority shares. "Chery is still like a fast growing piggy," said Yin.
"We're patient enough to wait for IPO until it is fully grown." Unlike many
joint ventures in the Chinese auto industry that depend on foreign technology
and sell home-made cars with overseas brands, Chery relies its own research and
development to turn out products with proprietary intellectual property right
(IPR). Chery has been ranked among the ten biggest automakers in China for
years. Statistics show Chery's current annual production capacity is about
350,000 cars, expected to rise to 600,000 cars in 2008. Chery's share will
sell a good price due to its high-speed expansion and concept of home-brand
automaker, said Wang Zhihui, an auto analyst with the Shenyin and Wanguo
Securities Research Institute. Auto sales in China has been booming since its
accession to the World Trade Organization in 2001. About 3.41 million cars were
sold in between January and November this year, an increase of 40 percent
year-on-year, according to figures from the China Association of Automobile
Manufacturers. The country's top 10 sedan manufacturers in the 11-month
period this year are: Shanghai GM, FAW Volkswagen, Shanghai Volkswagen, Chery,
Beijing Hyundai, Guangzhou Honda, FAW Toyota, FAW Xiali, Dongfeng Peugeot
Citroen and Geely. Only Chery, FAW Xiali and Geely are Chinese companies, the
others are joint ventures.
Xinhua
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