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Old 10-20-2006, 07:28 PM   #1
m14
 
Join Date: Feb 2006
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Default Great Wall Motor (GWM) cuts Hong Kong share sale in half

By Tian Ying and Vicki Kwong Bloomberg News

Published: October 17, 2006


BEIJING Great Wall Motor, China's biggest maker of pickup trucks and sport utility vehicles, said Tuesday it was cutting the size of a planned Hong Kong stock sale by half and will rely more on bank borrowing to fund expansion.

The company plans to sell a maximum of 151.1 million new shares, compared with a previous target of as many as 300 million shares, it said in a statement to the Hong Kong stock exchange Tuesday.

The automaker will keep its original expansion plan and instead rely on other funding sources, including bank borrowing and internal resources, it added.

Great Wall needs funds because it plans on adding compact cars to its product lineup in order to compete with Tianjin FAW Xiali Automobile, Geely Automobile Holdings and other automakers for a greater share of the Chinese car market. The company's stock plunged 9 percent when it said last month that it would sell new shares.

"Investors were concerned that the fast expansion into economic cars may involve risks," said Frank Li, an analyst with JPMorgan Chase in Hong Kong. "Beginning car assembly will accelerate the company's growth, given China's 1.8 million units of annual demand for economic cars and the company's advantages in cost control."

Shares of Great Wall rose 0.2 percent Tuesday in Hong Kong and closed at 6.51 Hong Kong dollars. The stock has more than doubled in value this year.

Great Wall, based in the northern city of Baoding, has been the country's largest seller of SUVs and pickups for the last eight years. The automaker aims to raise production of automobile parts and components.

Bai Xuefei, board secretary of Great Wall, did not answer phone calls from Bloomberg News seeking further details about the company's plans.

Great Wall, which specializes in low- priced vehicles for first-time buyers, aims to sell 70,000 vehicles in 2006, 22 percent more than last year, the company's chairman, Wei Jianjun, said in March. Exports will make up nearly 43 percent of 2006 sales, he said.

BEIJING Great Wall Motor, China's biggest maker of pickup trucks and sport utility vehicles, said Tuesday it was cutting the size of a planned Hong Kong stock sale by half and will rely more on bank borrowing to fund expansion.

The company plans to sell a maximum of 151.1 million new shares, compared with a previous target of as many as 300 million shares, it said in a statement to the Hong Kong stock exchange Tuesday.

The automaker will keep its original expansion plan and instead rely on other funding sources, including bank borrowing and internal resources, it added.

Great Wall needs funds because it plans on adding compact cars to its product lineup in order to compete with Tianjin FAW Xiali Automobile, Geely Automobile Holdings and other automakers for a greater share of the Chinese car market. The company's stock plunged 9 percent when it said last month that it would sell new shares.

"Investors were concerned that the fast expansion into economic cars may involve risks," said Frank Li, an analyst with JPMorgan Chase in Hong Kong. "Beginning car assembly will accelerate the company's growth, given China's 1.8 million units of annual demand for economic cars and the company's advantages in cost control."

Shares of Great Wall rose 0.2 percent Tuesday in Hong Kong and closed at 6.51 Hong Kong dollars. The stock has more than doubled in value this year.

Great Wall, based in the northern city of Baoding, has been the country's largest seller of SUVs and pickups for the last eight years. The automaker aims to raise production of automobile parts and components.

Bai Xuefei, board secretary of Great Wall, did not answer phone calls from Bloomberg News seeking further details about the company's plans.

Great Wall, which specializes in low- priced vehicles for first-time buyers, aims to sell 70,000 vehicles in 2006, 22 percent more than last year, the company's chairman, Wei Jianjun, said in March. Exports will make up nearly 43 percent of 2006 sales, he said
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