Dongfeng Motor Files For IPO On HK Exchange

Hong Kong, Aug 30 | Updated: Aug 31 2004, 05:53am hrs
Chinas third-largest car maker, Dongfeng Motor Corp, has filed an application with the Hong Kong Exchange for an IPO, market sources said on Monday, but the offering may be just 60 per cent of earlier plans. It wont hit US $1 billion for sure, said a source close to the deal, referring to a figure people familiar with the situation set in April. The company has not finalised the size for the initial public offering, the source said.

Euphoria for new listings from China has cooled as auto sales growth have slowed, another source said. The company, which makes sedans through joint ventures with Japans Nissan Motor Co and Frances PSA Peugeot Citroen, plans to sell up to 30 per cent of its enlarged share capital around November or December, the source said.

Chinas monthly sedan sales volume dropped to below 50,000 units in May from more than 200,000 in March. Sedan sales grew 3.7 per cent from a year earlier in July to about 170,000 units a slight improvement over the 2 per cent growth in June. The decline from a month earlier narrowed to less than 1 per cent from 4 per cent in June and 19 per cent in May. As China plans to remove import quotas by 2005, analysts worry that domestic auto makers will face excess supplies caused by heavy capacity expansions. JP Morgan, which holds a negative view on Chinas auto sector, expects Chinas sedans to be oversupplied by 11 per cent in 2004 and 23 per cent in 2005. Shares in Denway and Brilliance China have dropped 30 per cent and 58 per cent respectively since early June.