Chery works on listing plan

Chery Automobile Co, the top Chinese passenger car brand by unit sales, is planning a long-awaited stock listing to fuel its aggressive expansion at home and abroad. 
    
Li Feng, deputy general manager of the partner of Chrysler LLC and Fiat Auto SpA, said Chery expects to be a listed firm in the next two to three years "at the earliest". 
    
Owned by the government of the eastern city of Wuhu, Chery is conducting internal financial restructuring to pave the way for the listing, Li said. 
     
 An industry source told China Daily that the carmaker will float shares both on the mainland and Hong Kong. 
    
Zhang Xin, an auto analyst with Guotai & Jun’an Securities Co, estimated that Chery would need to raise at least 10 billion yuan (US$1.32 billion) through the dual listing. 
    
The company, which was set up in 1997 and started making cheap cars in 2001, is believed to be hungry for cash to feed its ambition of spreading out globally though, as Li put it, the company now enjoys "fairly good profits and a sufficient cash flow". 
    
Chery last month announced it aimed to move 1 million cars annually by 2010, up from 305,000 units last year. It expects to quadruple its overseas sales to 400,000 units. 
    
But Zhang said: "Chery should wait some time to secure a sizable listing as its current financial results are not very attractive for investors." 
     
Its post-tax profit tripled year-on-year to 347 million yuan in the first half of this year on core sales of 11.1 billion yuan, according to industry data. 
     
The profit is no match to that of rivals, such as General Motors Corp’s venture with SAIC Motor Co and Honda Motor Co’s tie-up with Guangzhou Automobile Corp, the two most lucrative carmakers in the world’s second-biggest vehicle market. 
     
Chery now has total assets of 22 billion yuan, according to sources in the company. 
    
Li said the firm has "diversified" fundraising channels, such as bank loans and investment from foreign partners. 
    
Huishang Bank, a local commercial bank in Wuhu, last month agreed to raise its credit line for Chery to 3.26 billion yuan from 860 million yuan in March.