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Free Transfer Of FAW Xiali Holding Power: FAW Group'S Overall Listing Path Surfaced.

2019/12/10 20:36:00 0

EquityThe Whole Path

On the night of December 8th, FAW Xiali (000927.SZ) announced that FAW shares will be transferred to the China Railway Materials Limited by Share Ltd and the major assets reorganization of the listed companies.

This means that FAW Group has transferred the "shell" resources of FAW Xiali, and will give up control of FAW Xiali in the future. This is not surprising. Clarifying the asset relations of its subsidiaries is an important prerequisite for China's first auto group to advance the overall listing plan.

In April this year, FAW car (000800.SZ) announced the reorganization of its assets, replacing the FAW passenger car assets with FAW's commercial vehicles, and solved the problem of competition between FAW Xiali and FAW cars which had plagued FAW's shares for 8 years.

A number of securities brokers reported that this analysis, with the FAW Group's equity gradually straightened out, or open the prelude to the overall listing. CAITONG securities has said in the research report that the FAW shares may abandon the control of FAW Xiali, and wait for the FAW Volkswagen share to resolve all the passenger car business or to integrate again after the dispute is resolved.

In the eyes of the outside world, it is the key task for the FAW Group to carry out the radical reform of FAW Group by reforming the independent sector, promoting the reform of state-owned enterprises and promoting the overall listing of FAW.

However, some analysts believe that FAW Group's overall listing still has some other obstacles such as joint-stock companies' equity relations and so on. It still takes a long time, but FAW Group is not urgent.

"It is not directly related to the listing as a whole. FAW's overall listing is not very urgent at present, and it is expected to be put on schedule in about three years. In December 9th, Cao He, a senior securities analyst in the automotive industry, told reporters in an interview with twenty-first Century economic report.

Elimination of barriers to listing as a whole

As a matter of fact, FAW has been listed for ten years, involving huge volume and complex asset relations.

As early as 2010, FAW Group began to restructure its main business in order to achieve the overall listing. In 2011, FAW Group's restructuring of its core business and main assets was established by FAW Group. Against this background, FAW Group's shares of two listed companies, FAW Xiali and FAW, were transferred to FAW shares. After FAW shares were transfered, it also made an irrevocable commitment to solve the competition with the listed companies in five years.

But 5 years later, this commitment did not materialize. In June 28, 2016, FAW sedan and FAW Xiali announced that FAW shares had originally planned to resolve their commitments with FAW and FAW Xiali industries in five years, and the commitment period was postponed for another three years as a transitional period. The landing time window was 2019.

In fact, FAW has made efforts to solve the competition problem. In 2017, FAW shares transferred the FAW Xiali 24.73% shares through an open way of the transferee. FAW shares tried to change the controlling shareholder of FAW Xiali by selling shares, so as to solve the problem of competition in the same industry. However, the plan failed to achieve the intention of collecting the intended transferee within the prescribed time.

By 2019, the FAW share conversion idea was resolved by restructuring the FAW car to solve the problem of blocking competition in the whole market of FAW.

In April this year, FAW car (000800.SZ) announced its asset restructuring. According to the restructuring plan, FAW liberation 100% stake is priced at 27 billion 9 million yuan, FAW car limited 100% equity price 5 billion 88 million yuan, two difference 21 billion 921 million yuan. Among them, the 19 billion 921 million yuan consideration is paid by FAW car in the form of issuing shares of 6.68 yuan / share, and the remaining consideration is paid in cash. FAW car also intends to support the fund-raising at no more than 3 billion 500 million yuan.

However, on the evening of November 28th, FAW car announced that it had adjusted the restructuring plan and abolished 3 billion 500 million yuan matching fund-raising, and the related consideration was paid by the company itself. In the industry view, the adjusted plan will speed up the trading process, so as to promote the plan landing and speed up the overall listing of FAW.

After the replacement of the company's assets, the passenger car business of the FAW car was stripped from the listed companies, and the main business of the FAW car listed company's main body was changed to commercial vehicle manufacturing and auto finance business. This also means that the problem of the same industry that has plagued FAW shares for many years is finally solved after 8 years.

On the other hand, as a result of successive losses, FAW Xiali made a 2 billion 560 million price in August 2016 and transferred the 15% FAW TOYOTA shares to FAW shares, and in November 2018, it paid 2 billion 920 million yuan to transfer the remaining 15% stake. Since then, FAW Xiali no longer holds TOYOTA's shares. FAW shares the FAW Xiali's quality assets, FAW TOYOTA's total income, and owns all 50% of the FAW TOYOTA China.

After the sale of the high-quality assets of FAW TOYOTA is fully sold, the "brand" of the FAW Xiali will only be left with "shell" resources. In the view of the outside world, FAW Xiali has lost its original value for FAW Group, and selling "shell" resources is only a matter of time.

The FAW Xiali asset restructuring is made up of three parts: first, FAW shares will be transferred to the China Railway Materials Limited by Share Ltd without charge to FAW Xiali, and two, FAW Xiali's existing assets and liabilities will be issued to the designated subsidiary of FAW shares; three, FAW Xiali will purchase the assets of the iron and steel company through the issue of shares.

That is to say, after transferring all the assets and liabilities, FAW Xiali will become a "shell company", while China Railway Corporation intends to backdoor listing.

"The FAW Group has removed a major obstacle to the overall listing," he said. Cao crane told reporters on twenty-first Century economic report.

Listing path gradually clear

On the whole, FAW shares has focused on FAW Volkswagen's 60% equity interest and FAW TOYOTA's 50% stake in quality joint venture assets, including FAW Mazda sales company and FAW Pentium, etc., and the red flag assets acquired by FAW car in 2016.

The above major business segments, which constitute the core business of the FAW Group, have been packaged into FAW shares. The FAW liberation assets, which belonged to FAW shares, have been replaced by FAW cars of the listed companies.

A number of coupons have previously believed that FAW car has a great probability to realize the core vehicle assets listing of FAW shares as a main body. In a research report, Everbright Securities said that compared with the past injection of high-quality resources into FAW shares, FAW's liberation will mean that FAW has the possibility of becoming a new platform for the FAW Group's overall listing. That is to say, after FAW is liberated, FAW Volkswagen, FAW TOYOTA and other quality assets will be packaged into FAW cars.

However, FAW Group still has obstacles in its overall listing.

In terms of the autonomous sector, the auto industry securities analyst told the twenty-first Century economic news reporter that if this plan was adopted, FAW Pentium and FAW Mazda just started out from FAW car listed companies, and Hongqi assets were sold to FAW shares by FAW car listed companies three years ago. If re injected again, they will face regulatory problems.

The bigger difficulty lies in the complex shareholding relationship between FAW Group and joint venture. As the autonomous sector is still at a loss, the joint venture is the main source of FAW's profits. For FAW Group, it will be a big problem to adopt FAW TOYOTA and FAW Volkswagen's two big companies into the report.

FAW shares from FAW Xiali acquired FAW TOYOTA's total stake, FAW TOYOTA's equity ratio changed to FAW shares and TOYOTA accounted for 50% respectively, but FAW Group did not have absolute control. However, after SAIC Group and Guangzhou Automobile Group and other large auto groups in the joint venture company share ratio of 50%, have achieved the overall listing, this situation is not difficult to solve.

There are many variables in FAW Volkswagen's equity issue. At present, FAW Volkswagen's shareholding ratio is 60% of FAW Group, while Germany Volkswagen, Volkswagen China and Audi share 20%, 10% and 10% respectively. As a matter of fact, FAW Volkswagen is currently a rare number of domestic and foreign joint venture car companies with a ratio of 60:40 to China. Over the years, the public has been seeking to increase its share in FAW Volkswagen in order to gain more profits. In October 2014, negotiations between the two sides finally broke through. According to the agreement reached between FAW Group and German Volkswagen, FAW Volkswagen shares will be adjusted to 51:49. However, because the Volkswagen Group was affected by the "scandal" scandal, the plan failed to land.

As Volkswagen Group has gradually stepped out of the "emission gate" incident to the darkest moment and the liberalization of China's motor joint venture shares has been restricted, the public's plan to adjust the stock ratio has been put on the agenda again. In March this year, Volkswagen Group CEO dice told the twenty-first Century economic report in 2019 that Volkswagen Group considered adjusting the stock ratio of joint ventures in China. However, diss did not disclose more details, nor did it explicitly consider which one of FAW Volkswagen, SAIC Volkswagen or the Jianghuai public.

Whether FAW and Volkswagen Group will adjust the joint stock ratio, but the Sino foreign joint venture negotiations on stock ratio will also affect the overall rhythm of FAW to a certain extent.

FAW reform speed up pace

FAW's overall listing is the acceleration of FAW's reform.

In August 2017, Xu Liuping carried out a series of radical reforms to China FAW after the chairman and Secretary of the Party committee of the first China Automobile Group Co., Ltd. One month after taking office, FAW Group announced the plan to deepen the reform of the organizational structure, set up the three major departments of red flag, passenger car and commercial vehicle. At the same time, more than 8000 managerial positions were all competing for posts.

FAW's reform burden is heavy and its burden is heavy. It is inevitable to make trade-offs. Over the past two years, the red flag and Pentium have launched a new brand strategy on the autonomous vehicle sector. The FAW Xiali is extremely dull. Besides announcing the brand of "Xiali" and making every effort to build a "Chun style" brand, several products launched are not good enough.

Among them, in the process of sorting out the autonomous sector, FAW Group focused its attention on the red flag. In January 8, 2018, FAW released the new red flag brand development strategy, and put forward the sales target of "sales of 100 thousand units in 2020, 300 thousand units in 2025, and 500 thousand ranks in 2035."

The total sales volume of the new red flag reached 33028, an increase of 602% over the same period. In the first half of November this year, the cumulative sales volume of Hongqi brand was 88020, an increase of 211% over the same period, and the target of 2020 has been completed ahead of schedule.

In December 2nd, Xu Liuping said at the 2019 Chinese entrepreneur Boao forum that the red flag is expected to go through 200 thousand new levels in 2020, which will double the sales volume in 2019 and double the expected target in 2020.

In addition to revitalize the vehicle business, FAW Group is also accelerating the transformation of parts and components.

On the night of November 29th, FAW 600742.SH announced that the FAW Group, the largest shareholder of the company, would transfer its FAW 5% shares to Ya Dong's investment through the agreement transfer. After the transfer is completed, the Jilin SASAC will become the real controller of the company.

Regarding the intention to give up FAW's holding rights, FAW Fu Wei replied to the Shanghai Stock Exchange's enquiry letter that FAW Group, in order to thoroughly implement the strategic plan and guiding spirit of deepening the reform of state-owned enterprises, deepen the pace of deepening the reform of state-owned enterprises' mixed ownership, and promote the layout and structural adjustment of state-owned capital, agreed to consider transferring some of its own shares to Ya Dong after deliberating with Ya Dong and considering its own internal decision-making procedures.

"FAW vehicle manufacturing business is difficult to mix and change, and the possibility is not great. Parts business is more likely to make breakthroughs through mixed transformation. The state-owned companies take over the company and cooperate with the Jilin SASAC to form a mixed division of labor. It can reduce the risk of parts, promote the operation of enterprises, and protect local employment. " Auto industry insiders told reporters on twenty-first Century economic report.

Where does Xiali go?

Selling shares, selling factories, selling qualifications, and now the "shell resources" transfer, once in the 90s of last century swept the streets of China's Xiali, the scenery no longer exists.

"FAW and Xiali will seem to have split up after FAW's control of Xiali's shares. The future of Xiali can only be self destructive, and now China's automobile industry has entered a shuffling period. Xiali is likely to be the first batch of fallen enterprises. In December 9th, a car industry insider told reporters on twenty-first Century economic report.

In June 14, 2002, FAW Group signed a restructuring agreement with Tianqi group. FAW Group was granted a 50.98% share of the company held by Tianqi group. After "Tianyi reorganization", Xiali became part of FAW's autonomous sector. The original TOYOTA of Tianqi was renamed Tianjin Faw Toyota Motor Co. The shareholding ratio of FAW TOYOTA was adjusted to TOYOTA's 50%, FAW Xiali 30% and FAW's 20%.

In the 90s of last century, Xiali was known as the "national car". It has been the champion of China's auto market for many years. In 2005, FAW Xiali became the first independent car company with annual sales exceeding 200 thousand cars. But in the next ten years, China's auto industry grew rapidly, and the joint venture began to exert itself in the Chinese market and the rise of its own brand. On the contrary, due to multiple reasons, Xiali limited to the low-end economic car industry, products and technology are gradually lagging behind, began to decline, missed the market opportunity, sales began to decline year by year.

After many years of hard work, in April last year, the Xiali brand officially declared a shutdown and focused on the Chun faction series. But unfortunately, the market competitiveness of several Chun style cars is insufficient, and the performance is poor. Data show that the first half of 2019, FAW Xiali produced a total of "Wei Zhi" and "Chun faction" brand cars 1126, down 93.34% compared to the same period, and sold 3920 vehicles, down 69.86% compared to the same period last year.

At the same time, FAW Xiali also faces enormous operating pressure. In the first three quarters of this year, FAW Xiali achieved a total revenue of 350 million yuan, down 62.52% compared with the same period last year, and the net loss was as high as 700 million yuan.

In fact, since 2013, FAW Xiali has been in a loss for years. In order to maintain the shell resources of listed companies, it has repeatedly sold assets to "survive".

In addition to FAW Xiali's two full sale of FAW TOYOTA's 30% stake, in September 2018, FAW Xiali also made a price of 1 yuan, which would give the wholly-owned subsidiary of Tianjin FAW Huali Automobile Co., Ltd. 100% equity, and transfer to the parent company of the new car force of Nanjing, known as the parent company of the auto company (Nanjing Zhixing, to pay the FAW Xia Li's 800 million yuan debt and the employees' salary 54 million 620 thousand yuan).

After selling several times, FAW Xiali did not have many cards on hand. In order to survive, this year FAW Xiali chose to join hands to build the new power of Bo county automobile.

On the morning of September 28th, FAW Xiali announced that Tianjin FAW Xiali automobile Limited by Share Ltd contributed to the establishment of a joint venture's major asset restructuring report (Draft), and announced the signing of the shareholder agreement with Bo county automobile. The two sides intend to invest in the establishment of a joint venture to develop and produce new energy vehicles. Among them, FAW Xiali invested 505 million yuan in the assets and liabilities of vehicle related land, plant, equipment and other assets, holding 19.9% stake in the joint venture company; Bo County car invested 2 billion 34 million yuan in cash and held 80.1% stake in the joint venture company. According to the investment report, 505 million invested more than 900 million assets and 400 million liabilities (900 million of which were land use rights and real estate).

After this transaction, FAW Xiali will assist the joint venture to apply for the qualification of vehicle production. Then, FAW Xiali will no longer have the qualification of vehicle production, and will not be able to continue to engage in vehicle production business.

In October 30th, FAW Xiali replied to the Shenzhen Stock Exchange's enquiry letter that if we continue to engage in vehicle related business, manufacturing can be resolved by entrusting a joint venture company or other companies that comply with the relevant regulations. If we do not continue to engage in vehicle business, the company's main business adjustment direction will also include, but not limited to, existing stock businesses such as warehousing, logistics and auto parts production, but there is no specific plan.

This also means that FAW Xiali has previously had plans to no longer produce its own products, and will be OEM by other enterprises in the future. The investment report also includes the contents of FAW Xiali personnel placement: after the establishment of the joint venture company, the relevant management, technology and engineering personnel of the FAW Xiali can voluntarily transfer to the joint venture company.

In November 18th, the joint venture company, Tianjin Bo County Automobile Co., Ltd. was incorporated and obtained business license in November 20th.

However, insiders told reporters that the FAW shares transferred to the Xiali holding power of FAW might affect the agreement before the establishment of a joint venture with the car of Bo county. According to the reorganization plan of the FAW Xiali, the existing assets, liabilities and personnel of FAW Xiali will all be set aside or inherited to the designated subsidiary of FAW.

"There is no effect on production qualification. According to our cooperation, the automobile assets such as qualification have been changed to the newly established Tianjin county. In December 9th, Bo county automobile related people told reporters on twenty-first Century economic report.

The person further said that the joint venture company Bo county is absolutely holding, and Bo county looks at the original Xiali plant, the mature technology team and the TOYOTA training system, which is very important for the new car manufacturers to ensure product consistency.

"Our current focus is on the smooth operation of Tianjin Bo County, as soon as possible to carry out factory rectification and trial operation. The future positioning of the plant is the production of pure electric and hybrid vehicles, no longer producing Xiali models. Tianjin Bo county is a brand-new company. FAW Xiali just invested with its factory, qualification and team. " The above Bo County stakeholders finally said.

 

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