Chongqing Chang'an plans 4 billion yuan add-issuance

Source: Global Times
[08:14 February 12 2010]
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By Chen Xiaomin

Chongqing Chang'an Automobile, China's second largest minivan maker, plans to raise as much as 4 billion yuan ($586 million) via a public add-issuance to expand its capacity, update its small vehicle technology and improve its in-house R&D.

The money raised will go to three projects. The company plans to spend 1.64 billion yuan ($240 million) to expand the capacity and update the technology of its production lines, which produce the CM9, F202, G401 and other minivans, Chongqing Chang'an said in a filing on the Shenzhen Stock Exchange Thursday. The project will take 20 months and will generate 1.13 billion yuan ($165 million) in the sixth year after the project is finished, the company said, adding it will be able to produce 220,000 minivans.

Another 1.98 billion yuan ($290 million) will go to update the company's low-emission CG and CC series engines, which power its compact cars, including the Yuexiang, Zhixiang, Benben and MPV models. Prices of those models range between 32,900-150,000 yuan ($4,815-$21,961).

And 380 million yuan ($56 million) will be spent on improving the company's in-house R&D.

Last month, Chongqing Chang'an contributed nearly 80 percent of the unit sales of its parent Chang'an Automotive (Group), the second biggest automaker by unit sales in China.

Thanks to policies including a halved purchase tax for small vehicles and auto subsidies for vehicle sales in the countryside, compact vehicle-focused Chongqing Chang'an sold 549,000 minivans last year, accounting for a 27.45 percent market share in the segment. And its mini vehicles soared 132 percent year-on-year to 98,000 units in January 2010.

Last year, the government paid 6.3 billion yuan ($922 million) in auto subsides, mainly on minivans, mini trucks and light-duty trucks in rural areas, helping China surpass the US as the world's largest vehicle market.

The new shares will be worth no more than 20 percent of its total capitalization, Chongqing Chang'an said.

The issue price won't be lower than the average price of the company's A-shares over 20 trading days in a row before the prospectus is public, or the average price of the company's A-shares on the last trading day.

Shares of Chongqing Chang'an, which saw its stock more than double last year, fell 1 percent Thursday to 11.83 yuan ($1.73).

Chang'an Automotive (Group) last November took over the automobile arms of aircraft maker Aviation Industry Corporation of China (AVIC), Harbin Hafei Automobile Industry Group and Jiangxi Changhe Automobile.

In a J.D. Power quality report last October on new vehicles launched in China, Hafei Minyi ranked highest in the minivan segment.