H-share Qingling Motors Co estimates it will invest 1.5 billion yuan (about HK$1.39 billion) over the next three years to double its annual production capacity to 100,000 vehicles, but sources of funding are not yet decided. The Chinese light-duty truck maker said on Wednesday that it was studying ways to raise funds for further development. Wu Jiqing , assistant to the general manager, said management had estimated it would cost the company between one billion and 1.5 billion yuan to increase its annual production capacity from the existing 50,000 vehicles to 100,000 in 1998. The estimate had not allowed for spending on projects to increase localisation of components and parts. Mr Wu did not expect the listed company to bear all of the cost, as its parent Chongqing General Auto Works and Japan's Isuzu, its minority shareholder, could cover part of the total investment. The expansion plan would be finalised by year-end. Deputy general manager Pan Yong said the investment could be raised by different methods such as convertible bonds, but they had to be approved by government authorities. He did not comment on whether Qingling might have difficulty raising funds by share placement as the company's H shares already account for 49 per cent of its share capital. It is China's industrial policy that motor vehicle enterprises have to be at least 51 per cent held by the state. Mr Pan said Qingling would increase production capacity to 70,000 vehicles next year, and to 100,000 vehicles in 1998. Two-thirds of the capacity would be for making Isuzu's new 100P model and the rest for TFR pick-up trucks. Qingling has ridden on the surge in sales of 100P trucks and an absence of foreign exchange loss to churn out a 520 per cent increase in profits to 183 million yuan in the first six months. BZW Asia analyst Richard Lo revised upward forecasts for Qingling's profits, expecting it to earn 390 million yuan this year, up 119 per cent, because of a rise in use of domestically made parts. Domestic content rose from 60 per cent to 65 per cent in the first half, and was expected to reach 67 per cent in December and beyond 70 per cent at the end of next year. In the first half, Qingling's overall gross margin improved to 15 per cent. Mr Pan said the ex-factory price of its 100P model had been steady at 118,000 yuan since it was introduced to the market last year. Qingling plans to sell 35,000 vehicles this year, up 16 per cent.