hkskyline
July 27th, 2005, 10:25 PM
Geely partnership in $1.4b HK first
Alman Loong, Hong Kong
July 28, 2005
Geely Automobile Holdings, the smallest Hong Kong-listed mainland automaker, plans to jointly invest HK$1.44 billion with the Hong Kong Productivity Council to develop high-end cars and related components.
Geely's executive director Yang Jian said the investment will cover the establishment of a production base like a factory building and spending on research and development.
Geely and the Hong Kong Productivity Council, a government-sponsored unit promoting local businesses, signed a memorandum of understanding a month ago to develop the first Hong Kong-made car and components.
They plan to produce a high-end model named GH1 in Hong Kong within the next 24 months for the mainland and overseas markets.
Geely expects to obtain an equity stake in the project and is looking to contribute mainly its expertise to minimize cash investment, Yang said.
"In the long run, the project could help [Geely] to upgrade its products and improve brand image, with the likelihood of exporting this new model from Hong Kong to China in future,'' a Merrill Lynch research note said.
Geely is hoping to increase overseas sales as China's market has been hit by price war on intense competition.
The firm, which is already selling to Egypt and Syria, plans to start exporting its products to Malaysia after securing a five-year contract with IGC Group earlier this year.
Overseas sales of the company amounted to 5,000 units last year, or 5 percent of total sales, and it aims to raise that share to 8 percent, or 8,000 to 10,000 units, this year.
Overall, Geely aims to sell 140,000 cars this year, up from 100,000 units in 2004. In the first half of this year, the company's sales grew 6.3 percent to 60,000 units from the same period last year. "The ability to move up towards the higher market segment is crucial to Geely's long-term development,'' Merrill Lynch said. "This will widen the company's product range as well as stabilize its profit margin notwithstanding the pricing pressure that we expect to continue in the next two years.'' Geely's shares leapt 3.09 percent to close at one-month high Wednesday. The stock has gained 37 percent this year.
Alman Loong, Hong Kong
July 28, 2005
Geely Automobile Holdings, the smallest Hong Kong-listed mainland automaker, plans to jointly invest HK$1.44 billion with the Hong Kong Productivity Council to develop high-end cars and related components.
Geely's executive director Yang Jian said the investment will cover the establishment of a production base like a factory building and spending on research and development.
Geely and the Hong Kong Productivity Council, a government-sponsored unit promoting local businesses, signed a memorandum of understanding a month ago to develop the first Hong Kong-made car and components.
They plan to produce a high-end model named GH1 in Hong Kong within the next 24 months for the mainland and overseas markets.
Geely expects to obtain an equity stake in the project and is looking to contribute mainly its expertise to minimize cash investment, Yang said.
"In the long run, the project could help [Geely] to upgrade its products and improve brand image, with the likelihood of exporting this new model from Hong Kong to China in future,'' a Merrill Lynch research note said.
Geely is hoping to increase overseas sales as China's market has been hit by price war on intense competition.
The firm, which is already selling to Egypt and Syria, plans to start exporting its products to Malaysia after securing a five-year contract with IGC Group earlier this year.
Overseas sales of the company amounted to 5,000 units last year, or 5 percent of total sales, and it aims to raise that share to 8 percent, or 8,000 to 10,000 units, this year.
Overall, Geely aims to sell 140,000 cars this year, up from 100,000 units in 2004. In the first half of this year, the company's sales grew 6.3 percent to 60,000 units from the same period last year. "The ability to move up towards the higher market segment is crucial to Geely's long-term development,'' Merrill Lynch said. "This will widen the company's product range as well as stabilize its profit margin notwithstanding the pricing pressure that we expect to continue in the next two years.'' Geely's shares leapt 3.09 percent to close at one-month high Wednesday. The stock has gained 37 percent this year.