The sale of red flag assets, has become a FAW car "shell" straw.
Following the FAW Xiali sell 15% of the assets of Toyota to FAW shares, the November 19, FAW Car announced that the proposed price of 428 million yuan will be sold to the FAW shares.
"The first rejection of the burden, the red flag on the FAW car financial statements to help, the red flag from the listed company moved to the group's approach be regarded as a technical treatment, after all, Faw car into the red flag too." Securities analyst Cao He On the 12th in the 21st century economic report, said in an interview.
The outside world also have a variety of speculation, "FAW car sale", "stop", "red flag independence", "solo" and so on in public opinion.
November 24, the Shenzhen Stock Exchange on the red flag assets to be the issue of transactions to the FAW car bursts of five questions asked to FAW in the red flag business operations, the red flag asset assessment, the implementation of trading procedures, the red flag trademark issues and competition issues to make additional explanation .
December 6, FAW Car Shenzhen inquiry reply to the Shenzhen Stock Exchange, the red flag four years of total revenue accounted for only 2.1%, red flag after independence, FAW Car will still have the right to use the trademark, in addition, the red flag positioning high-end brands , And other brands FAW Group, there is no competition with the industry.
Why should the red flag be sold? FAW Car can stop falling? Reply to the words in a few words, not enough to explain the meaning of the FAW car to sell the red flag.
The shareholders of the General Assembly a few months ago, "on the China First Automobile Co., Ltd. to change the commitment to fulfill the motion of the motion" was voted overwhelming, the FAW's overall listing of the short term is difficult to open.
Selling does not result in positioning swing
First half of 2016, FAW Car issued the worst financial history, the company a loss of 826 million yuan, a decrease of 613.64% over the same period last year, since then, on the "FAW car Brokeback", "stripping red flag" rumors everywhere.
In March of this year, FAW Group set up the red flag business department, then the red flag of the trademark by the FAW car exclusive, changed to FAW Group and licensed third party sharing. Subsequently, the FAW Group came the news to FAW's Red Flag Division as the main body, will set up FAW shares Red Flag branch, and FAW Car the same level of operation.
The red flag was born more than 50 years ago, the head aura, located in the independent high-end, commonly used in national concierge services. Nevertheless, the history of the development of the red flag can be described as bumpy.
After a brief "national car" treatment, the red flag in the 1980s cut-off, resumed production in 1996, mainly for the field of official vehicles. In 2008, FAW opened the red flag revival plan.
By the impact of the market economy, long-term "official car" image of the red flag, trying to more civilians into the private market, but obviously, a new generation of consumer groups for the "national car" loyalty is not high, and lack of technology accumulation.
Independent brand is on the rise, but the red flag brand strength is weak, innovation and product power are very backward, less models, technology is poor, facelift slow, but also to red flag revitalization even more difficult.
Even now, the red flag is still in the brand cultivation period, the product is still relatively simple, only H7 and L5 two models. Since the "Red Flag Renaissance" project, FAW to assume the brand reshaping the strategic model - H7 invested more than 6.3 billion in R & D and technology upgrades.
Red flag H7, for example, lasted four years of research and development, costing 5.2 billion red flag H7 sedan, officially listed in 2013, sales have been dismal. 2013 sales of only 2961; 2014 sales fell to 2589; 2015 sales have increased to 5037; the first 10 months of this year, the red flag H7 sales of only 3400, the industry ridicule "is not enough with the price Audi car orders a week. "
Even more unfortunate is that in the 28 million -42 million car sales accounted for, the red flag is only 0.38%, the market share is very low. "FAW or the old state-owned enterprises are thinking of the Northeast, the red flag of the market competition is relatively weak, red R & D investment of more than 50 billion yuan, but failed to achieve the upgrading of products, so if the official car positioning, it is best to insist on the official car Route, but later, the red flag began to attack the commercial field of private cars, and now, brand strategy has been completely disrupted.
Rejection of the burden to protect the shell?
December 6, FAW car in the reply letter to the Shenzhen Stock Exchange mentioned in 2012 to the end of October this year, the red car sales totaled 2.711 billion yuan, accounting for only 2.1% of FAW's total operating income. 2016 the first 10 months of operating income of only 243 million yuan, accounting for only 1.4% of FAW car revenue over the same period.
In the reply letter, the FAW shares also admitted that the red flag costly. The letter said that the red flag is a high-end brand of its own brand, market positioning and the company's current production of the Pentium series and FAW Mazda products are significantly different, for the different market environment, there is no competition with the industry. The transfer of the red flag to the FAW-related products manufacturing assets, can reduce the current operating pressure, optimize the allocation of resources, concentrate on doing the Pentium and other independent vehicle type business, in line with the actual business and development strategy needs.
On the one hand red flag H7 sell well, and FAW car still need to spend huge amounts of money into the red flag brand research and development. In other words, the loss of the FAW car and did not get benefits from the red flag brand.
Last April, FAW Car and FAW shares to build red flag H7 technology upgrade project, the project's construction period is 26 months, is expected to invest 277 million yuan, the investment recovery period is expected to 5.71 years. As of June 2016, the project progress of 32%, not yet yield.
Cadillac and Lincoln, faced with the biggest problem is that the red flag of the product positioning and its overall image and quality does not match, but also makes the product market after the case of cold sales, in the FAW Car system, a serious loss.
FAW Car and red flag losses, stripping red flag assets, help FAW Car to reduce the financial burden on the annual performance of FAW sedan boost will help, the biggest benefit may be to keep the shell. "Caohe said.
At present, the outside world to sell the shares of FAW Xiali and FAW car sale red flag put together, that this is the three parties will restart the overall market signal. In this regard, Cao He told reporters, "Since the red flag has been sold, and hand, the overall market speculation off the mark."
He believes that the overall listing of FAW shares did not go through the road, the FAW car to sell the red flag, throw away a burden, but to reduce the loss of investors; However, the overall market for gambling investors, the hope is very slim.
"Three years, FAW shares as a whole can not be on the city, then there will be merged, or FAW 'married' (to be acquired.)" Caohe believes that if this judgment can be established, it will be China's largest auto history Of the merger.
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