China sport-utility vehicle maker Great Wall Motor cancels fund raising plan amid share tumble
Great Wall Motor, China’s largest sport-utility vehicle maker, announced that it would terminate plans to issue shares worth 12 billion yuan (HK$14.31 billion) after its stock fell below the minimum offer price.
The Shanghai-listed company said on Friday that the market price of its shares fell below the proposed minimum issue price due to market volatility in the second half of 2015.
In July the company’s executive board approved a proposal to issue the shares at not less than 43.41 yuan per share.
However, shares of Great Wall Motor ended Friday’s trade in Shanghai at 9.10 yuan, down by 82.77 per cent from a year ago.
The company said it will push ahead with plans to expand production and develop new energy vehicles, except use its own cash to fund these initiatives.
“The company will consider raising funds through various financing methods in case of insufficiency of own funds, in order to ensure the projects will progress smoothly and business will be developed as scheduled,” a company statement read.
It added that they have no plans to issue shares in the next three months.
The announcement comes as the company reported 2015 net profit increased 0.22 per cent to 8 billion yuan. Company chairman Wei Jianjun said described the annual result as a “relatively high level of profitability when compared with that of the industry”.
The automobile industry, although hit by China’s stagnant economic growth, saw a 5.6 per cent year on year growth in light vehicles sales in 2015, according to data from market researcher IHS Automotive.
Wei added that the company remains optimistic for 2016 even as it faces intensified market competition as consumer demand for SUVs, or sport utility vehicles, will continue to grow.
IHS Automotive analysts forecast that Chinese brands, which account for 36 per cent of the passenger vehicle market in China, will benefit from government policies, low oil prices and existing tax cuts for new purchases.