Carmaker BYD applies to list new shares to fund 2.2b yuan expansion
BYD, the Hong Kong-listed mainland car and battery maker backed by US billionaire investor Warren Buffett, has applied to issue up to 79 million shares in Shenzhen.
It did not specify any time frame for the listing, but the China Securities Regulatory Commission is due to review the application on Monday.
The company did not disclose now much it hoped to raise from the A-share listing. But it said the proceeds from the listing would fund a 2.2 billion yuan (HK$2.63 billion) expansion plan, and the surplus would be used for working capital or to repay bank loans.
Under the expansion plan, nearly 1.8 billion yuan will be used to develop a research and development base in the company's home town of Shenzhen, and to expand its car parts division. Some 400 million yuan will be used to make lithium ion batteries.
An industry analyst in Hong Kong, who asked not to be named, said he was informed by BYD that a decision on the application should be known in about two months. But he questioned the timing of the carmaker's A-share listing proposal.
'Firstly, BYD's annual results last year were not good,' he said. 'Also, there are many big state-owned enterprises queuing up to issue new stock in the latter half of the year, and how good the chances are for BYD to get a piece of the pie is hard to tell.'
In the car industry alone this year, Chery and Hong Kong-listed Great Wall Motors were seeking A-share listings, the analyst said. If the listing went ahead it may dilute the shareholding of Buffett. 'But it wouldn't make a palpable impact.'
The proposed new share issue will represent 3.4 per cent of the company's enlarged capital.
MidAmerican Energy Holdings, a subsidiary of Buffett's Berkshire Hathaway, owns 9.9 per cent of BYD.
BYD said its April sales in the China market fell 12 per cent year on year, mainly because of the end of government incentives to buy cars and intensifying market competition. Sales totalled 40,100 units in April, down from 45,400 units from a year earlier but up 0.2 per cent on March sales.
The carmaker had planned to list its shares on the mainland last year. But in July it decided to put the listing plan on hold because of the poor performance of equity markets there.
Its profit last year was down 33 per cent from 2009. at 2.5 billion yuan. Vehicle sales rose 10 per cent year on year to more than 500,000. The company said it hoped to maintain growth of between 10 to 15 per cent this year.
