FAW Group's overall listing and then "downsizing"


New Express News (trainee Li Chuan Intern Zhang Huizhong) FAW Xiali (000927) announced yesterday that the company will acquire 100% of the shares of FAW Huali (Tianjin) Automobile Co., Ltd. for a price of RMB 300,000. This is also the FAW Group's completion of the entire restructuring of its largest component company, FAW Foam, at the end of December last year. It has again divested its non-performing assets in less than 100 days.

Yesterday, FAW Xiali opened at 8.10 yuan, to close at 8.59 yuan, the highest 8.79 yuan, up 3.49%.

Discontinued 300,000 transfers a year

The announcement shows that on March 25th, FAW Xiali signed a share transfer agreement with FAW Group on 100% equity of FAW Huali. The company will acquire 100% equity of FAW Huali at a price of RMB 300,000, and sign the “equity transaction” from both parties. Within five working days from the date of the contract, payment shall be made in one lump sum.

FAW-Wahly is a wholly-owned subsidiary of FAW Group. Due to over-pricing and aging models, the production of happiness messengers and Terui models was suspended successively in early 2007. Wah Lee is in trouble and has now stopped production for more than a year. According to the data of the FAW Huali Asset Appraisal Report, its net asset value is only RMB 242,500, and its loss is as high as RMB 130 million. It is already heavily insolvent.

FAW Xiali said that after the completion of the acquisition, it will build another vehicle production base through integration and investment transformation, and launch a new generation of cars that the company is currently developing.

Open for the overall listing

According to analysis, the reason why FAW Group decided to accept the transferee in a very short period of time was to sell FAW Huali at a sale price of RMB 300,000, mainly because FAW is preparing for the overall listing.

Nowadays, SAIC and Dongfeng have all been listed in the three major automobile groups in China. FAW Group has been slow to make progress since it announced its overall listing in March last year. The biggest problem lies in the consolidation of group assets. As a listed company plan, FAW Group will divorce its non-performing assets and good assets.

At the end of December last year, FAW Group's largest parts and components company, FAW Foao, had completed its overall restructuring due to a loss of more than RMB 100 million. FAW Group wished to divest non-core assets. In less than 100 days, FAW Group once again stripped FAW Huali, which had already been suspended, and dumped the burden of Huali Motor. This time it was once again “downsizing” and its ultimate goal was to open the way for the overall listing of FAW Group.




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