Introduction: As Dongfeng and Yueda, which represent Chinese capital, gradually withdraw from the stop loss, The dongfeng Yueda Kia, which has not yet changed its name, will become a foreign-led enterprise.
(Text/Pan Yuchen Editor/Lou Bing) Following the sale of all the shares of Dongfeng Yueda Kia by Dongfeng Motor Group and the restructuring of the joint venture company by the other two major shareholders, Kia and Yueda, the restructuring prospects of Dongfeng Yueda Kia have changed again.
On March 1, Jiangsu Yueda Investment Co., Ltd. disclosed that Dongfeng Yueda Kia, in which the company has a 25% stake, intends to implement a capital increase of 600 million US dollars (about 3.8 billion yuan). However, considering the current fierce competition in the domestic automotive industry and the company's new project investment capital needs, the company gave up participating in the capital increase of Dongfeng Yueda Kia Company.
According to the assessment, the value of Dongfeng Yueda Kia's 100% equity is 771 million yuan, and the scale of Dongfeng Yueda Kia's capital increase is 600 million US dollars, and the proportion of Dongfeng Yueda Kia's equity held by the Company after the capital increase is reduced from 25% to 4.2%. The automotive manufacturing business will no longer be an important part of the company's business structure.
As with the reasons for Dongfeng Motor Group's abandonment of equity, Yueda pointed out in the announcement that Dongfeng Yueda Kia's 2021 annual performance is expected to continue to lose money, affecting the company's net profit attributable to the parent of about -531 million yuan. After abandoning its participation in the capital increase, Yueda expects its net profit to increase by about 192.75 million yuan in 2022. As of November 30, 2021, Yueda Automobile Group had total assets of RMB5.027 billion and net assets of RMB2.507 billion. From January to November 2021, the main business income was 230 million yuan.
Dongfeng Yueda Kia was originally established by a tripartite joint venture of Kia, Yueda Automobile Group and Dongfeng, with an equity structure of 50%:25%:25%. In December 2021, Dongfeng Motor sold its 25% stake in the joint venture on the Shanghai Stock Exchange for a price of 297 million yuan. The deal was finally closed in January this year.
Subsequently, the shareholder composition of Dongfeng Yueda Kia became Kia Co., Ltd., Yueda Automobile Group and Jiangsu Yueda Investment Co., Ltd., and the shareholding ratio remained 50%:25%:25%. With Yueda abandoning the capital increase, the equity ratio of Kia, Yueda Automobile and Yueda Investment will become 50%: 45.8%:4.2%. Considering that the Sino-foreign joint venture share ratio of passenger car companies is completely liberalized this year, according to sources, with Yueda abandoning the capital increase, Kia, as a foreign party, is expected to increase the share ratio to more than half and obtain the dominance of the joint venture company.
In February this year, Kia and Yueda announced the establishment of a new joint venture, and plans to announce a new name in April. At the same time, the two sides also announced plans for the next 10 years, including the goal of total production and sales in China of more than 4 million vehicles, that is, an average of 400,000 vehicles a year. In the past 2021, Dongfeng Yueda Kia's annual sales of only 158,000 vehicles have declined for three consecutive years, and the peak sales of 650,000 vehicles in 2016 have shrunk by three-quarters.
The decline in sales volume and financial situation is the main reason for Dongfeng Motor's selling of Dongfeng Yueda Kia shares. According to the 2021 annual pre-loss report previously disclosed by Yueda Investment, the company expects to achieve a net profit attributable to shareholders of listed companies of -799 million yuan in 2021 and a net profit of -817 million yuan after deducting non-recurring gains and losses.
In the view of Yueda Investment, one of the main reasons for the pre-loss of performance is that Dongfeng Yueda Kia's 2021 annual performance continues to lose, affecting the company's net profit attributable to the mother of about -531 million yuan. However, Yueda Investment attributed the impact of Dongfeng Yueda Kia's performance to factors such as the decline in core production and sales and the increase in precious metals prices.
In fact, Dongfeng Yueda Kia, which sells only 158,000 vehicles a year, has a total production capacity of 890,000 units per year in its three factories in Yancheng, Jiangsu Province, and even though the first factory has been leased to the new car-making force Huaren Express, the remaining two factories still reach 750,000 vehicles, and the idle capacity phenomenon is extremely serious. The reality is that with the rise of its own brand products and the decline in the price of German-Japanese joint venture vehicles, Kia's market demand in China has plummeted.
According to the third quarter financial report of Yueda Investment, by the end of the third quarter of 2021, the total assets of Dongfeng Yueda Kia Company were 11.68 billion yuan and the net assets were -611 million yuan. In the first three quarters of 2021, the main business income was 9.5 billion yuan, and the net profit was -1.715 billion yuan.
In order to improve the status quo, Kia and Yueda also announced that the new joint venture will rapidly increase vehicle sales and capacity utilization through expanding investment, introducing new models, developing new energy vehicles, and setting up export bases. However, as Dongfeng and Yueda, which represent Chinese capital, gradually withdraw from the stop loss, Dongfeng Yueda Kia, which has not yet changed its name, will become a foreign-led enterprise. In the face of fierce market competition and the transformation trend of the industry's "new four modernizations", it is difficult for Kia to stop losses in the short term from the distance that it was backward in the Chinese market in the past, how long can Korean cars stick to in China?
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