Sinotruk Drops on USD1 Billion Deal to Upgrade Plant of China's Oldest Truck Maker
Liao Shumin
DATE:  Sep 28 2020
/ SOURCE:  Yicai
Sinotruk Drops on USD1 Billion Deal to Upgrade Plant of China's Oldest Truck Maker Sinotruk Drops on USD1 Billion Deal to Upgrade Plant of China's Oldest Truck Maker

(Yicai Global) Sept. 28 -- Sinotruk Jinan Truck, the maker of China's first heavy-duty truck, is planning to raise no more than CNY7 billion (USD1 billion) via private placement to smarten up its heavy-duty vehicles. Its shares fell.

The company will issue 16.8 million new shares, the Shandong province-based firm said in a statement on Sept. 25, without disclosing the identity of the intended buyer. Founded in 1956, Sinotruk had the fourth-biggest domestic market share in heavy-duty trucks last year.

The commercial vehicle maker's stock price [SHE: 000951] slid by the daily limit of 10 percent to CNY32.17 (USD4.70) this morning, the lowest since July.

The company would use CNY5 billion of the proceeds for two projects, one for making connected electric trucks and another one for high-performance axle housing parts, both of which require CNY9 billion in total. The remainder would be used to repay debts and supplement liquidity.

The existing plant, which was built in the late 1970s, can no more meet Sinotruk's future development needs that involve new energy vehicles and connected trucks, it explained.

Sinotruk's new production line for electric trucks, which should take about two years to build and operate at full capacity by 2024, should make 160,000 units per year. It should be able to make 450 axle housings a day by 2022 after a construction period of 18 months.

After the share sale, Sinotruk Hong Kong's stake in its unit would fall to 51 percent from almost 64 percent.

Sinotruk made 14 percent more in net profit at CNY728 million (USD106.7 million) in the first half of this year from a year ago, according to its earnings report. Its revenue rose 19 percent to CNY26.6 billion (CNY3.9 billion) amid increasing sales.

Editor: Emmi Laine
 

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Keywords:   Sinotruk Jinan Truck Co.,Investment,China,Trucks