Guangzhou Automobile shares slump 14 per cent on Yaris recall
GAC Toyota to recall 83,000 Yaris sedans in China over potential air bag problems
Guangzhou Automobile Group, one of China’s largest state-owned carmakers, saw its shares plunge the most since its initial public offering after announcing it was recalling thousands of vehicles produced by its joint venture in China, and after reporting less than expected third quarter earnings.
The Guangzhou-based carmaker, also known as GAC, slumped as much as 14.89 per cent to HK$8.26 on Monday morning, its lowest level in more than three months, before paring earlier losses later. Its Shanghai-listed shares halted trading on October 18 pending release of information on a proposed private placement of shares.
The share slide came after China’s product quality watchdog said in a statement on Friday that GAC Toyota, a joint venture between the Guangzhou carmaker and its Japanese peer, decided to issue a recall on 83,000 Yaris sedans over potential air bag problems that may cause injury to occupants.
Analysts also suggested that eroding investor confidence in China’s car sales growth rate triggered a sell-off after the company released its third quarter earnings on Sunday.
“Looking forward, people believe Chinese carmakers’ would fare worse over the fourth quarter of the year, and that bearish market expectations were pounding stock prices,” said Alexious Lee, head of China industrial research with CLSA.
GAC said its net profit for the first nine months of the year more than doubled to 5.61 billion yuan, missing analyst estimates, while revenue surged 81.40 per cent to 34.39 billion yuan from a year earlier
Great Wall Motors, another Chinese automobile giant, saw its shares slide 11.5 per cent last Wednesday after reporting its third quarter results, which triggered a slew of downgrades at research houses such as Nomura and HSBC.
Separately, GAC said in a filing to the Hong Kong exchange that party secretary and general manager of the company Zeng Qinghong, 55, was appointed company chairman effective October 30. Zeng joined GAC in 1997 and had served as deputy chairman of the company since 2005. He has overseen the setting up of joint ventures with Italy’s Fiat Chrysler, as well as with Toyota and Honda.
Zeng succeeds Zhang Fangyou, 60, who resigned after reached retirement age, the company said.
GAC’s shares closed down 13.8 per cent on Monday to HK$9.38. They have gained 38.78 per cent this year.