Geely shares surge 12pc after reports of majority stake in Denmark’s Saxo Bank

PUBLISHED : Tuesday, 03 October, 2017, 4:21pm
UPDATED : Tuesday, 03 October, 2017, 4:31pm

Chinese carmaker Zhejiang Geely Holding Group saw its shares surge more than 10 per cent in Hong Kong afternoon trading on Tuesday after the company increased its stake in Denmark’ Saxo Bank to above 50 per cent.

Shares of the company, one of China’s largest carmakers, jumped 12.3 per cent in afternoon trading in Hong Kong to HK$24.70 from HK$22 last Friday, after Reuters reported that the company had lifted its stake to 51.5 per cent in Denmark’s Saxo Bank at a cost of US$300 million for the additional 21.5 per cent. The whole deal would cost the company more than US$800 million.

Another boon to the company’s share price, Morgan Stanley had raised its target price for the carmaker from HK$15 to HK$30, saying it believes Geely’s strong new model pipeline as well as its upcoming Lynk & Co models should underpin its sales growth in the second half and onwards.

Also, the company’s ambitious new energy vehicle plan should benefit from the long-term development of new energy vehicles s in China, said the investment bank.

Shares of the company have had a good year so far amid buoyant vehicle sales, with the stock advancing more than 212.4 per cent in the year to date, becoming one of the best performing equities on the Hong Kong bourse.

The company said the total sales volume for the month of August was 96,505 units, an increase of approximately 80 per cent over the same period last year and up around 6 per cent from July 2017.

A Geely spokes person said the deal with Saxo Bank was an “attractive investment”, believing the technologies and product value of the Danish bank could be expanded in Asia, according to the report.

Geely, the owner of Swedish carmaker Volvo Cars, had said in May that it would acquire 30 per cent of the privately owned Saxo Bank, a leading online trading platform for foreign exchange in Denmark.

“The company has been doing well, with several of its new models rolled out that are set to boost its sales volume,” said Zhang Yu, managing director 張of Automotive Foresight, an auto industry research company.

The deal with Saxo Bank is still awaiting regulatory approvals, according to the company.

Yet, the company’s foray into the European financial sector might be a sign that Chinese companies, despite China’s tightened reins on capital outflow, have been marching into the areas that Beijing deemed positive, say analysts.