BYD, the mainland's largest maker of rechargeable batteries, said it intended to sell shares in its handset component business and seek a separate listing for the unit to help it benefit from the industry's potential for rapid growth.
UBS will lead the share sale, with the aim of securing a listing in Hong Kong by August or September, a market source said.
'BYD Electronic will become a direct competitor of Foxconn International Holdings,' said Frederick Wong, an analyst at BNP Paribas Group, who recommended BYD shares as a 'buy'.
'The spin-off can help BYD to lower its debt-to-equity ratio and strengthen its management team in the handset business.'
Hong Kong-listed Foxconn is the main handset supplier for Nokia and Motorola.
BYD's wholly owned handset subsidiary, BYD Electronic, had submitted an advance booking form for an application for a separate main board listing, BYD said in a statement to the Hong Kong stock exchange yesterday.