morningwhistle.21cbh.com - Chinese state-owned automaker FAW Group is reported to have postponed its push for a stock listing,which might make it difficult to land on A-share market before Q4.
China FAW Group, originally named First Automotive Works, has a 50-year history and over a dozen subsidiaries and affiliates. The group has been revamping and consolidating corporate its financial structures for a smooth IPO launch,yet things seem to be much more complicated than imagined.
Equity issues have been over years spread to be the main stumbling block.
FAW Tianjin Xiali Automobile, a subsidiary in which Japan's Toyota Group holds a 30% stake, became the focus of attention when FAW decided to list the whole group on the stock exchange in 2007. The major problem was reportedly its shareholding structure with Toyota.
Yet latest news determines the 30% stake held by Toyota has been injected into FAW Co.,Ltd.,a new company FAW in June of last year created as a stock listing vehicle, with registered capital of 78 billion yuan (US$12.3 billion).The group lumped its own stakes in wholly owned firms and joint ventures — including FAW Tianjin Xiali Automobile, FAW Car, FAW Jiefang, FAW Volkswagen and other affiliates set up with partners like General Motors and Toyota — into the new company. FAW now holds 99.6% of the listing vehicle.
"FAW Group's overall listing process is complex,with many links unfinished such as how to deal with the equity issues with Xiali's second largest shareholder Tianjin Automobile Industrial Group." pointed an investment banker familiar with the listing process, indicating equity issues remain the key factor influencing its IPO plan.
Meanwhile, FAW group became the biggest "loser" with a net loss of 10million yuan in Q1 while the company's revenue posted a 34.39% year-on-year drop to 6.3billion yuan. FAW sold 46,600 cars in Q1, a 34.09% slump from the corresponding period last year.
In reality FAW have been incurring losses since last year, revealing operating losses of 50 million yuan (US$7.89 million) for the third quarter of 2011 and to the surprise of most auto industry analysts and securities investors, its losses for the fourth quarter shot up to 536 million yuan (US$84.6 million).
"Slack car sales, rising raw materials cost as well as sales expenses contributed to the huge loss," said the company when asked about its deteriorating performance.
Some analysts estimate that FAW's eagerness to raise funds via an IPO could be related to its plan of staging a comeback for its celebrated Hongqi — or Red Flag — sedans,which could be among the major winners of the government plan to require senior Communist Party officials and government organizations to purchase cars made in China.
Source:gasgoo.com