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Lifan goes public in Shanghai in November

SHANGHAI – Lifan Industry (Group) Co. (Lifan) began trading on the Shanghai Stock Exchange on November 25 after four years of preparation, according to local media reports.

The Chongqing-based company, which is among China’s top motorcycle producers, raised ¥2.9 billion ($426.47 million) for its initial public offering of 200 million A-shares at ¥14.5 per share.

Lifan said in a filing to the Shanghai Stock Exchange that it has allocated 20 percent of the IPO shares to institutional investors, with the rest offered to retail investors.

Lifan is the first privately-owned automaker to trade in A-share market. The company is also the second automaker publicly listed after Guangzhou Automobile Group Co., Ltd.

In 2008 the company got a $90 million injection from AIG, which industry analysts said was not nearly enough to turn around the company’s car business.

In 2009, when China’s auto market outstripped the U.S.’ to become the world’s largest with a more than 46 percent sales increase year-on-year, Lifan sold only 41,699 vehicles, less than 2 percent of the total annual sales of the natio’s largest automaker SAIC Motor.

“The listing will definitely help alleviate the company’s thirst for cash. Also the advantages the company has with its sales network, management system and engine development skills are sure to win Lifan investors,” said Chen Zheng, an auto analyst with China Securities Journal.

According to Yin Mingshan, chairman of Lifan, the company plans to invest the proceeds from the offering into several auto and motorcycle projects, including an annual 150,000-unit capacity passenger car facility (50,000 units in the second phase) with an investment of ¥865.45 million (including ¥850 million from the IPO); a motorcycle production base project with a total investment of ¥512.24 million (including ¥350 million from the IPO), and an annual 200,000-unit auto engine project and 1 million-unit general gasoline engine project, with an investment of ¥299.28 million (including ¥280 million from the IPO).

It is estimated that all three projects will see total sales revenues of up to ¥9.56 billion annually after operation, with net profit of up to ¥565 million.

Lifan brand vehicles include three sedan models: the 320, 520 and 620. The current productivity of Lifan is 50,000 units per year, and is expected to grow to 100,000 units after the operation of the second phase of the passenger vehicle facility which will mainly produce mid- and high-end sedans like Lifan 620 and 720. In total, Lifan hopes to produce nearly 500,000 vehicles a year by 2015.

Founded in 1992, Lifan mainly engaged in the production of motorcycles in its early years, and started auto manufacturing in 2005. Currently, Lifan is primarily involved in the production of automobiles, motorcycles and engines.

 

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