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Shanghai Auto expects profit surge in 1st quarter

By Gong Zhengzheng (China Daily)
Updated: 2007-04-06 10:01

Shanghai Automotive Co, the listed arm of China's top carmaker SAIC Motor Corp, yesterday said it expects first-quarter profit to more than quadruple, boosted by a massive asset injection from the parent in December and brisk sales.

But the firm didn't provide a profit figure in a statement to the Shanghai Stock Exchange. It is scheduled to reveal January-March profit on April 28.

Shanghai Auto reported 222.9 million yuan in net income in the first quarter of last year, with earnings per share at 0.068 yuan.

The company in December spent 19.1 billion yuan in stocks, buying assets from SAIC Motor, including those of two car ventures with General Motors and Volkswagen. The move enabled the parent to list in its entirety.

SAIC Motor's stake in the listed firm increased to 84 percent as a result of the deal.

Shanghai Auto also attributed the expected profit rise to brisk sales in the first quarter.

SAIC Motor yesterday said its sales from January to March, including those from its South Korean unit Ssangyong Motors, surged 28 percent to 436,800 vehicles from the previous year.

Li Chunbo, an analyst with CITIC Securities Co in Beijing, said: "As a market leader, Shanghai Auto is expected to perform strongly this year and in the years to come thanks to the asset swap and growing car demand in China."

Li estimates the company's 2007 earnings per share will be 0.57 yuan.

Shanghai Auto shares tumbled by 1.08 percent to 13.71 yuan yesterday on the Shanghai Stock Exchange, following a surge of 5.2 percent on Wednesday.

China Association of Automobile Manufacturers has predicted that sales of domestically made vehicles will reach 8.5 million units this year, up from 7.22 million units last year.

Vehicle sales in China are forecast to exceed 10 million units in 2010.

Shanghai Auto's joint venture with General Motors in Shanghai sold 113,200 cars in the first three months of this year, up 26.5 percent year-on-year. Meanwhile, sales of its venture with Volkswagen jumped 35.5 percent to 105,500 units.

Shanghai Auto said it has received more than 6,300 orders for its own-brand Roewe sedan since the model was put onto the market on March 5.

The 2.5-liter Roewe, based on the Rover 75 technology bought from the failed British carmaker MG Rover, is Shanghai Auto's first own-brand passenger car.

Analysts believe the company's own-brand cars will give a new boost to its performance in coming years.

SAIC Motor announced last April that it planned to roll out 30 passenger car models under its own badges with a total investment of 10 billion yuan by 2010, aiming to sell 200,000 own-brand cars annually by then.