Huatai to launch IPO in 2005
By Gong Zhengzheng (China Daily)
Updated: 2004-12-28 08:50

Huatai Automobile Co Ltd, China's privately-owned maker of sports utility vehicles (SUVs), said it aims to go public in the Hong Kong Stock Exchange next year.

The Beijing-headquartered company, a partner of South Korea's Hyundai Motor under technical licensing deals, is preparing to establish a joint-stock unit to pave the way for its Hong Kong listing, Huatai said in a statement to China Daily.

"We will depend on our strong performance and bumper profits to achieve our listing plan," the company said.

However, Huatai did not reveal the size of capital it plans to raise from the stock market.

Its sales jumped by 200 per cent in the first 11 months of this year from a year earlier, Huatai said, without giving a specific figure.

The company, which sold 10,000 SUVs last year, produces its own brand Jitian and Hyundai's Terracan SUVs in its plant in East China's Shandong Province.

Analysts say Huatai's listing plan is in an attempt to win favour from Hyundai, which also has three other partners in China.

Hyundai runs another car joint venture with State-run Beijing Automotive Investment Co Ltd.

Kia Motors, owned by Hyundai, has a car joint venture with Dongfeng Motor Corp - one of China's biggest automakers - and Yueda Group, an industrial group in East China's Jiangsu Province.

Hyundai has also agreed with Jianghuai Automobile Co Ltd in East China's Anhui Province to form a commercial vehicle joint venture.

"We are an important member for Hyundai to achieve its plan of producing 1 million vehicles in China (annually by 2010). We want to co-operate more closely with Hyundai," Huatai said.

Earlier this year, a Huatai official told China Daily the company expected to form a joint venture with Hyundai.

However, Huatai's joint venture plant with Hyundai will face hurdles from China's new auto industry policy.

Each foreign automaker is only allowed to form at most two joint ventures with different Chinese partners to produce the same category of vehicles, according to the new auto policy launched in June.

If one foreign automaker controls a majority stake in another foreign mark, they will be treated as one company when it comes to the joint venture requirement.

"It will be difficult for Huatai to go public and form a joint venture with Hyundai alone as it is a small privately-owned player and could not gain government blessing," said Zhang Xin, an analyst with Guotai & Jun'an Securities Co Ltd.

"If Huatai is willing to merge with Beijing Automotive Investment (or Dongfeng), things will be easier," Zhang said in an interview.

The auto policy permits foreign automakers to have more than two joint ventures in China if they join forces with their existing joint venture partners to merge other local firms.

Both the Beijing auto firm and Dongfeng are seeking Hong Kong listings and mergers of small automakers in China for further expansion.

"Hyundai is playing rival among different partners in China to gain bargaining power as are many other foreign automakers," said Jia Xinguang from the China Automotive Industry Consulting and Development Corp.

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