Based in Shenyang in China, Brilliance China Auto makes cars, minibuses and automotive components. It has a car-making joint venture with BMW and a minibus-making joint venture with Toyota.
Brilliance falls on parent's placement
Shares of Brilliance China Automotive plunged to a one-month low yesterday after they resumed trading following an announcement of a share placement by the carmaker's parent company.
While analysts said it was a bad sign that the major shareholder and senior executives had sold part of their stakes in the company - which has been the top industry pick at some houses, within nine months - they believe Brilliance's fundamentals are still sound and it will make a good buy when its price falls to about HK$6.50. The stock closed 6.76 per cent lower at HK$7.04 yesterday.
In a filing with the Hong Kong stock exchange yesterday, the carmaker, which has a 50-50 joint venture with Germany's BMW, said it suspended trading for a day on Wednesday as its parent, Huachen, placed 125 million existing shares at HK$7.17 each. Upon completion of the transaction, Huachen's interest in Brilliance would be reduced to 42.48 per cent from 44.97 per cent.
In January, Brilliance chairman Wu Xiaoan, chief executive Qi Yumin and independent non-executive director Lei Xiaoyang sold 5.63 million shares at HK$9.05 to HK$9.18 each, raising a total of HK$51 million.
Half of the 29 analysts who track the stock maintain their buy recommendation. Steve Man from Nomura Securities said Brilliance's prospects remained bright as luxury car sales should continue to outperform the broader market in the coming years. Ole Hui from Mizuho Securities said Huachen and the company's executives probably just wanted to realise some of their profits.
The news also dragged down the shares of Baoxin Auto, a major BMW dealer on the mainland, by 5.3 per cent.