FAW Car rises 9pc on strong rating, asset-injection talk

Shares in Shenzhen-listed FAW Car rose by the most in three months yesterday after China Merchant Securities gave it a 'strongly recommend' rating due to rising sales and market speculation that the state-owned parent would inject its remaining assets into the carmaker.

The company, which is a partner with Mazda Motor Corp, closed 9.99 per cent higher at 22.68 yuan yesterday.

Jilin-based First Auto Works Group, the mainland's second-largest carmaker, is the majority owner of two listed car subsidiaries: FAW Car and Tianjin FAW Xiali Automobile. Market watchers speculate that the state-owned parent will inject its remaining assets into both subsidiaries, mainly joint ventures with Volkswagen and Toyota.

The subsidiaries would pay for these assets by issuing shares to the parent.

Tianjin FAW Xiali Automobile, which makes small economy cars, closed 9.55 per cent higher at 17.66 yuan yesterday, although sales of such cars slowed in the mainland last year.

A spokesman for Tianjin FAW Xiali said the company still operated well and there were no updates on the anticipated asset injection plan.

The China Merchant Securities report said FAW Car's Besturn brand had recorded good sales last year and the company would benefit from any asset injections.