Guangzhou Automobile shares jump 7pc on rebound in sales
Rebound in sales of vehicles it makes with Toyota and expansion plans trigger rally
Guangzhou Automobile (GAC) shares yesterday rose to a one-year high on the back of a rebound in sales of the cars it makes with Toyota Motor and the group's expansion plans.
GAC jumped as much as 11.1 per cent, before closing 7.4 per cent ahead at HK$8.31.
The carmaker told the Shanghai stock exchange it planned to spend 2.85 billion yuan (HK$3.6 billion) over the next few years to boost production and develop new models for the domestic market.
As Japanese carmakers have lost share in the mainland after the territorial dispute between Japan and China exploded in August last year, net profit at GAC - which has joint ventures with Toyota, Honda, Mitsubishi and Fiat - plunged 73.5 per cent to 1.13 billion yuan last year, just a fifth of what it made two years before.
The firm's chairman, Zhang Fangyou, has said its business would turn around this year, with steadying Japanese car sales and the rising popularity of the GS5, its indigenous SUV that is selling at a rate of about 5,000 per month.
Toyota, which produces cars with three local partners on the mainland, said sales of cars made with GAC rose 37.3 per year on year last month.
GAC's net profit could more than double to 2.55 billion yuan this year, a Bloomberg analysis said.
Meanwhile, the outlook for carmakers' shares is improving as the market anticipates the central government continuing to subsidise vehicles powered by new energy sources. Growth in the mainland car market and incentives for foreign carmakers are also lifting sentiment.
The China Passenger Car Association expected sales of the three major types of cars - SUVs, multipurpose vehicles and sedans - to rise 14 per cent year on year this month, compared with an increase of 16.15 per cent for all passenger cars during the first four months.
The shares of carmaker Great Wall Motor, electric car and battery maker Chaowei Power and car dealer Yongda Auto rose between 0.45 per cent and 0.83 per cent yesterday. The Hang Seng Index fell 0.45 per cent.
A rumour that a 20 per cent tax would be applied to sales of vehicles costing 1.7 million yuan after import tax raised concern among traders. Fewer than 5,000 such cars were sold last year.