Faw Xiali Suffers Setbacks in Share Sale, Sets Up Passenger Vehicle Powertrain Branch in Tianjin
Yu Liyan
DATE:  Nov 21 2017
/ SOURCE:  Yicai
Faw Xiali Suffers Setbacks in Share Sale, Sets Up Passenger Vehicle Powertrain Branch in Tianjin Faw Xiali Suffers Setbacks in Share Sale, Sets Up Passenger Vehicle Powertrain Branch in Tianjin

(Yicai Global) Nov. 21 -- Tianjin Faw Xiali Automobile Co. [SHE:000927] has shelved its plan for transfer share as the deadline for public tender offer has expired and no qualified investor made a bid for it, the automaker said in a statement yesterday.

The public company has set up a passenger vehicle powertrain branch in Tianjin near capital Beijing following the introduction of a powertrain resource integration campaign, per the statement. It injected the powertrain assets acquired in 2015 to the Tianjin branch.

The listed company and the Tianjin branch entered into an "asset transfer contract" yesterday, agreeing to transfer routine powertrain production assets and debts at the former's engine and transmission subsidiaries to Faw Car Co. [SHE:000800] to guarantee normal operations at the new powertrain subsidiary.

These moves and the aborted share transfer mean that Faw Xiali has been trying to salvage itself, but has run into serious difficulties, independent auto industry analyst Zhang Xiang told Yicai Global.

New energy vehicles (NEV) are not new today. Many Chinese automakers of varying sizes have already entered the highly competitive NEV market before Faw Xiali. The firm is also under considerable pressure in traditional car sales, Zhang said.

As the only loss-making listed Chinese carmaker in the first half, Faw Xiali registered a 37.9 percent loss in operating income --CNY623 million (USD93.8 million), profit losses of CNY671 million, and a negative net profit attributable to shareholders of CNY686 million, down 32.17 percent on the year, its semi-annual report shows.

The company halted share trading on the afternoon of Sept. 8 due to a major deal proposed by its controlling shareholder, Faw Car Co. Rumors spread a few days later that Faw Car was planning to dump shares in Faw Xiali. Gree Electric Appliances Inc. [SHE:000651] was rumored to be the new owner, but the home appliance manufacturer denied the rumor.

Faw Car has proposed to sell part of its shareholding in Faw Xiali, and the share sale will bring in a new controlling shareholder, the latter noted in the statement. The State-Owned Assets Supervision and Administration Commission has approved Faw Car's proposal to sell a 24.73 percent stake in Faw Xiali via a public invitation for tender, it said in an earlier statement dated Nov. 7. The announcement sparked widespread concerns in the market.

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Keywords:   MSCI,Share Transfer,NEV