2007'02.01.Thu
Xinhua Far East Confirms Chongqing Changan Automobile Co., Ltd.'s BBB Issuer Rating; Rating Outlook Changed from Stable to Negative

March 31, 2006

HONG KONG, March 31 /Xinhua-PRNewswire/ -- Xinhua Far East China Ratings today confirmed the BBB domestic currency issuer credit rating of Chongqing Changan Automobile Co., Ltd. ("Changan Auto" or "the Company," SZ A 000625, B 200625); its rating outlook, however, was changed from stable to negative. The outlook change incorporates Xinhua Far East's negative view on the toughening Chinese automotive market, concerns about the Company's pricing power in the mini-vehicle submarket, doubts about the sustainability of growth of its self-branded products, as well as expectations that its capital expenditure will rise in the near term. Competition in China auto market is getting fierce due to lower than expected demand growth and overcapacity. Changan Auto will not resume its monopolistic position in mini-vehicle submarket over the foreseeable future as its immediate follower, SGM Wuling, has occupied a 30% share of the submarket. Price competition has intensified in the mini-vehicle category and, even though it enjoys rapid sales growth, this growth has been unable to offset the negative effect on earnings by widespread price cutting. Changan Auto's profit margin fell significantly in 2004 and Q305 following the Company's decision to cut prices to maintain its position in the market. The contributions from its sedan business failed to offset downward pressures in the mini-vehicle category. Furthermore, Xinhua Far East is concerned about whether Changan Auto's self-branded products can compete with giant players and achieve sustainable growth. Changan Auto Group's ("Changan Group," the Company's controlling shareholder) ambitious strategic plan may also lead to higher capital expenditure and stretch its financial flexibility in the short term. But despite the challenges faced by its mini-vehicle business, the Company's position in the sedan segment has been given a boost with the release of more competitive models as a result of its cooperation with global giants. Xinhua Far East also believes the Company has the ability to cushion further profit margin drops in the OEM sedan market by releasing readily marketable models and increasing the localization rate of parts and components. Falls in profit margins are expected to be smaller in the mini-vehicle segment, with far less aggressive price cutting anticipated in the future. These factors, along with the Company's adequate debt repayment ability (as evidenced by its cash reserves, sufficient financial flexibility and liquidity), prompted the confirmation of the Company's BBB rating. It should also be noted that on 9 February 2006, the Company announced that Changan Group would transfer its 52.47% stake in Changan Auto to China Southern Industrial Auto Limited (the controlling shareholder of Changan Group). However, Xinhua Far East expects this transaction will not have a significant impact on Changan Auto's operations and credit profile. Chongqing Changan Automobile Co., Ltd. is currently a controlled subsidiary of Changan Auto Group, the fourth largest auto group in China. By the end June 2005, Changan Auto Group held a 52.47% stake in the Company. The Company's turnover was RMB18.5 billion and RMB13.4 billion in 2004 and 3Q05 respectively. The Company is the strategic co-partner of Ford Motor Company and Suzuki Motor Corporation in China. It produces sedan models, including the Mondeo, Fiesta, Focus and Swift, as well as self-branded mini-vehicles. Changan Auto is a large-cap company constituting the Xinhua/FTSE China 200 and B35 Indices. As of March 30, 2006, its total A-share market cap equaled RMB6.2 billion, with investable market cap of RMB1.9 billion. Its B-share market value was USD205million, of which all is investable. For the rating report summary, please visit http://www.xinhuafinance.com/creditrating . Note to Editors: About Xinhua FTSE China 200 and B35 Indices Xinhua FTSE China 200 Index is the large cap index in the Xinhua FTSE China A Share Index Series and includes the top 200 companies in China by market cap. It is designed as a tradable index and is calculated in real-time every 15 seconds. Xinhua FTSE China B 35 Index is the large cap tradable index in the FTSE Xinhua China B Index Series, covering `B' shares listed on the Shanghai and Shenzhen stock exchanges. It provides international investors with exposure to the mainland Chinese market. For daily data and further information, see http://www.xinhuaftse.com . About Xinhua Far East China Ratings Xinhua Far East China Ratings (Xinhua Far East) is a pioneering venture in China that aims to rank credit risks among corporations in China. It is a strategic alliance between Xinhua Finance (TSE Mothers: 9399), and Shanghai Far East Credit Rating Co., Ltd. Shanghai Far East became a Xinhua Finance partner company in 2003 and the first China member of The Association of Credit Rating Agencies in Asia in December 2003. Capitalizing on the synergy between Xinhua Finance and Shanghai Far East, Xinhua Far East's rating methodology and process blend unique local market knowledge with international rating standards. Xinhua Far East is committed to provide investors with independent, objective, timely and forward-looking credit opinions on Chinese companies. It aims to help investors differentiate the credit risks among the corporations in China, thereby, cultivating their awareness and promoting information disclosures and transparency in China market. For more information, see http://www.xfn.com/creditrating . About Xinhua Finance Limited Xinhua Finance Limited is China's unchallenged leader in financial information and media, and is listed on the Mothers board of the Tokyo Stock Exchange (symbol: 9399) (OTC ADRs: XHFNY). Bridging China's financial markets and the world, Xinhua Finance serves financial institutions, corporations and re-distributors through four focused and complementary service lines: Indices, Ratings, Financial News and Investor Relations. Founded in November 1999, the Company is headquartered in Shanghai with 21 news bureaus and offices in 18 locations across Asia, Australia, North America and Europe. For more information, please visit http://www.xinhuafinance.com . About Shanghai Far East Credit Rating Co., Ltd Shanghai Far East Credit Rating Co., Ltd. is the first and leading professional credit rating company with comprehensive business coverage in China. It is an independent agency established by the Shanghai Academy of Social Sciences with the mission to develop internationally accepted standards for capital market in China. The company is a pioneer in conducting bond-rating business in China. For years, it has been authorized by the Shanghai branch of the PBOC to undertake loan certificate credit rating. Since establishment, it has rated over 1,000 corporate long-term bonds and commercial papers, based on the principles of objectivity, fairness and independence. The company has also maintained over 50% market share in the loan certificate-rating sector in Shanghai for three consecutive years. With its strong local presence and knowledge, it provides investors with unique and the most insightful credit opinion. For more information, see http://www.fareast-cr.com . For more information, please contact: Hong Kong Joy Tsang, Corporate & Investor Communications Director, Xinhua Finance Tel: +852-3196-3983, +8621-6113-5999 or +852-9486-4364 Email: joy.tsang@xinhuafinance.com US David Leeney, Taylor Rafferty (IR/PR Contact in US) Tel: +1-212-889-4350 Email: david.Leeney@taylor-rafferty.com SOURCE Xinhua Far East China Ratings
PR
Post your Comment
広告
ブログ内検索
アーカイブ
カウンター