Guangzhou Auto First-Half Profit More Than Triples on Chinese Car Demand
Guangzhou Automobile Group Co., a partner of Toyota Motor Corp. and Honda Motor Co. in China, more than tripled profit in the first half as sales increased.
Net income rose to 2.31 billion yuan ($339 million), or 0.587 yuan a share, from 640 million yuan a year earlier. Sales totaled 28.9 billion yuan, the company reported in a statement to the Hong Kong stock exchange today.
Guangzhou Auto, based in the nation’s Guangdong province, began trading in Hong Kong yesterday after completing a buyout of unit Denway Motors Ltd. last week. The carmaker, which makes Toyota’s Camry and Honda’s Accord sedans, said it expects to sell 15 percent more passenger cars, or 720,000 units, this year.
“Sales growth can be maintained at a stable level in September and October, and that makes us confident we can achieve our target this year,” Zhang Fangyou, Guangzhou Auto’s chairman, told reporters in Hong Kong today.
Guangzhou Auto’s Honda joint ventures are running at close to full output, while the Chinese automaker plans to raise the capacity of its Fiat venture to 140,000 by 2012, it said today.
The carmaker is the country’s sixth-biggest auto group by volume and the market leader in large sedans, Nomura Holdings Inc. analyst Yankun Hou said in a report yesterday.
Honda, Toyota Ventures
“We expect Guangqi Honda and Guangzhou Toyota to outperform the market in the next few years,” Hou wrote in the note to investors, referring to the company’s joint ventures. The partnerships will offer steady growth because the Japanese carmakers have focused on building their brands and cultivating customer loyalty, Hong Kong-based Hou said.
Guangzhou Auto fell 0.8 percent to close at HK$9.12 in Hong Kong trading. The benchmark Hang Seng Index dropped 1 percent.
The automaker aims to boost annual production capacity to more than 1 million vehicles by the end of this year from 606,600 in 2009, the company has said. Guangzhou Auto’s net income was 2 billion yuan last year. It will offer shareholders an interim dividend of 0.09 yuan per share, it said today.
Rising affluence has spurred demand for vehicles in China, which overtook the U.S. to become the world’s biggest automobile market last year. Vehicle sales may rise to 16 million this year, the China Association of Automobile Manufacturers said on Aug. 10, boosting its forecast from a previous estimate of 15 million.
Guangzhou Auto, which also makes buses and light-duty trucks, plans to introduce its own-brand sedan this year. The company plans to have the capacity to make 100,000 of its own- brand models in 2010, Vice Chairman Zeng Qinghong said in Hong Kong today.
To contact the reporter on this story: Liza Lin in Shanghai at llin15@bloomberg.net
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