Car companies listed busy major auto groups go to A shares "examination"

In 2011, major auto groups went to A shares to take the exam.

On the one hand, the H-share auto listed companies that have successively announced their return to A-shares - after BYD Auto's successful landing of A-shares, August 3 Great Wall Motor's return to A-shares will come to an end; at the same time, GAC Group is making a comeback. On the other hand, it is a domestic auto group that plans to be listed as a whole. FAW Group, which has taken a few shots, has taken a difficult path toward asset integration before its listing.

Why auto brand owners and large state-owned auto companies are rushing to finance this round of financing? What roadblocks will they encounter on the road to A-shares? This clearly became the most exciting capital story of the auto industry in 2011 and was the key to the future of these auto companies.

On the eve of the overall listing of FAW Group, Chinese and foreign shareholders launched a battle around the equity of FAW-Volkswagen. FAW Group hopes to maintain its controlling position and transfer a maximum of 9% of its shares; Volkswagen Group took the opportunity to increase its holdings by 9% to 10%. Around 1% of FAW-Volkswagen’s shares, the Chinese and foreign parties once stagnated.

Under the strong demand of Volkswagen Group, FAW Group finally agreed to reduce the shareholding of FAW-Volkswagen. Informed sources disclosed that FAW Group intends to sell 9% of the shares of FAW-Volkswagen, all to be taken over by Audi. After the completion of the transaction, FAW Group, Volkswagen, Audi, and Volkswagen will each hold 51%, 20%, 19% and 10% of the shares of FAW-Volkswagen. Since Volkswagen, Audi, and Volkswagen are all owned by the German Volkswagen Group, FAW-Volkswagen will end the history of China holding 60% of its shares for 20 years.

At the crucial moment before the listing, FAW Group agreed to reduce its holdings in order to pave the way for the overall listing. FAW Group stated that the company will undergo restructuring and restructuring of its main business and plans to establish China First Automobile Co., Ltd. (abbreviated as "FAW"). It is understood that FAW will become a platform for FAW Group to achieve overall listing. An investment bank official analyzed that: “In accordance with the relevant regulations, FAW Group must transfer the Chinese shares of the joint venture company it owns to FAW shares. For example, FAW Group holds 60% of the shares of FAW-Volkswagen, and would like to transfer to FAW shares. It is necessary to seek the consent of foreign shareholders. "According to public figures, FAW-Volkswagen is the largest profit contributor to FAW Group. Whether China can package its assets will determine the future financing scale.

In terms of sales volume, FAW-Volkswagen is a small company within the FAW Group, accounting for only 33%; but no one can compare its profit contribution. In terms of 60% equity, FAW-Volkswagen's contribution rate to FAW Group's profit is as high as 63%. "China's First Auto Group Corporation 2010 report" shows that in 2010 the FAW Group sold 2.558 million vehicles, with a profit of 20.7 billion yuan. FAW Group executives stated that FAW-Volkswagen’s sales revenue in 2010 was 168.4 billion yuan, and it was also understood that FAW-Volkswagen’s net profit was about 22 billion yuan.

In the eyes of FAW Group, FAW-Volkswagen is a golden chicken that will lay more eggs. FAW-Volkswagen executives said: "FAW-Volkswagen is entering the stage of high sales and profit growth. In recent years, FAW-VW has grown rapidly. In 2009, its sales revenue was approximately 117.7 billion yuan, and it increased to 168.4 billion yuan in 2010, a year-on-year increase of 43%. 2009 The annual sales volume was 682,300 units. In 2010, the sales volume reached 856,900 units, an increase of 25.56% over the same period of last year. "The new products have continuously increased the contribution to FAW-Volkswagen, and the company's profitability will further increase in the future. A few years ago, FAW When Volkswagen sells 300,000 to 400,000 vehicles a year, Jetta takes up about 50% of the total sales volume after launching golf in 2008, launching Bora in 2009, launching CC in 2010, and introducing value-added products such as Magotan this year. It will continue to grow, but the proportion of sales of old products will continue to decline.” It is precisely this point of view that Volkswagen Group took the opportunity to raise its shareholding. In fact, since 2003, Volkswagen Group has been seeking to increase the stake in FAW-Volkswagen. Informed sources said, "Even in the Chinese auto market in 2005 when the recession, the German Volkswagen Group did not give up the idea." German Volkswagen Group's financial statements in 2005 showed that the Chinese business loss of 119 million euros. It is understood that, after deducting the amortization of investment projects' expenses and expenses, and financial factors, only FAW Volkswagen and Shanghai Volkswagen have contributed 35 million euros in profits to German Volkswagen Group.

In order to promote the overall market, FAW Group can only reluctantly cut off. In exchange, Volkswagen and Audi must also raise FAW-Volkswagen. When asked why 9% of stocks fell on Audi, informed sources said that this is conducive to the luxury car brand Audi's running in China, but also conducive to the further growth of the profits of FAW-Volkswagen. An Tiecheng, general manager of FAW-Volkswagen, said that in 2015, FAW-Volkswagen's annual production and sales capacity will reach 1.65 million, of which Audi is 700,000. At that time, Audi has contributed more than 40% to FAW-Volkswagen, which currently accounts for less than 30%. Volkswagen China CEO Ni Kaiming said, “Our relationship with FAW Group, including FAW-Volkswagen, is very good. Because of this, FAW-Volkswagen continuously introduces new and very advanced products and technologies in China, and continues to invest in new factories.”