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Jinbei Auto transfers shares of a subsidiary

Echo From Gasgoo| December 13 , 2017

Jinbei Auto, China auto market

Shanghai (Gasgoo)- Recently, Jinbei Auto announced, "Jinbei Auto has already completed the procedures of transferring all Jinbei Vehicle’s shares." This announcement drew a conclusion to Jinbei Auto's transferring plan. Thereafter, how to turn the tables through its strong parts and components business has become a new challenge.

Jinbei Vehicle was a share-controlled company of Jinbei Auto, and Jinbei Auto held 90% share while Jinchen, a wholly-owned subsidiary of Jinbei Auto, held 10% share. As of the asset appraisal day, the net assets of Jinbei Vehicle were minus RMB 70.57 million, in deficit for the third consecutive year.

This equity transfer of Jinbei Auto was considered by insiders as an attempt to protect the shell resources by selling commercial vehicles business to its parent company. This was not the first time. Before June 24th, Jinbei Auto sold 39.1% share of Brilliance Jinbei at the price of RMB 1 to a holding company of Brilliance Auto, Shenyang Jinbei. Brilliance Jinbei was similar to Jinbei Vehicle for it also lost money for years before equity transfer. For these two transfer cases, Brilliance Auto engaged in neither of them, yet it was obvious that Jinbei Auto wanted to sell non-performing assets to Brilliance Auto to protect shell resources.

In the meantime, Jinbei Auto also made new arrangements to its parts and components subsidiaries. The transactions between Jinbei Jiangsen and Jinbei Andaotuo were close. Jinbei Jiangsen transferred 50% share of CRH, and then its asset unit on car seat business to Jinbei Adient. However, Jinbei Auto clarified in its announcement that, the transactions were among subsidiaries, and won't bring influence to the overall profitability of Jinbei Auto.

Though the independent directors of Jinbei Auto reached a consensus that the business transfer aligned with the overall development of Jinbei's vehicle parts and components business, yet Cao He, an investment company president said in an interview that, the asset transaction among subsidiaries might be a prelude to Jinbei Auto's "shell selling".

Despite adjustments to parts and components business, Jinbei Auto's future development remains uncertain. While many new self-owned brands emerged strikingly, Jinbei Auto with years of experience spun off its vehicle business. Jia Xinguang, a well-known auto industry analyst, said that, relying on conventional products, lacking technical advances, and losing the grasp of SUV market opportunities are main reasons why Jinbei Auto missed a great timing to expand market shares. Besides, Jinbei Auto's parts and components business relied greatly on Brilliance BMW, which also limited its further development.

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