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Yuchai Group to transfer 55% share of a parts subsidiary

The reporter learnt recently from Guangxi Assets and Equity Exchange that, Guangxi Yuchai Machinery Group Co. , Ltd. (Yuchai Group) lists its 55% state-owned share of Guangxi Yulin Yuchai Daye Machinery Parts Co., Ltd. (Yuchai Daye Company) for sale. The listed price is 11.5 million Yuan and the listing will lasts from Nov.11---Dec. 8.  

In the listing announcement, Yuchai Group stressed that: the intended buyer shall be a machinery manufacturer and supplier of Yuchai with a registered capital not less than 30 million Yuan. It shows Yuchai Group does not completely give up Yuchai Daye Company.  

The remaining 45% share of the company is held by chairman, general manager and legal representative of Yuchai Daye Company Li Bo.

The announcement also shows that Yuchai Daye company, founded in Jan., 2003, mainly engages in production and sales of 4 categories products, including oil coolers, steel components, diesel engine transport holders and diesel generators.  

Yuchai Daye Company has one branch and two subsidiaries. The Nanning branch focuses on the steel component business to support Guangxi Yuchai Special Purpose Vehicle Co., Ltd. It also owns 25% equity of Guangxi Yulin Aobo Engine Electronics Co., Ltd. and 20% equity of Guangxi Yulin Yuchai electric vehicles.  

As of June 30, 2008, Yuchai Daye Company has a total evaluated asset of 101.1828 million Yuan, a total liability of 78.3921 million Yuan, minority shareholder equities of 1.8696 million Yuan, and a net asset of 20.9211 million Yuan. During the assessment period, its capital rise by 10.8329 million Yuan.

Currently, Yuchai Daye company owes Yuchai Group about 29.81 million Yuan. Since the successful transfer of the share, the new company shall repay off the debt within 4 years. In addition, the reposition of staff involves a total of about 1.90 million Yuan, of which Yuchai Group shall bear about 1.50 million Yuan and Yuchai Daye Company shall assume the remaining 400 thousand Yuan.  

The announcement says, after the successful transfer of equity, the new company will be entitled to continue using Yuchai trademark and name only if it agrees to pay 1% of the sales income to Yuchai Group each year as brand royalties to Yuchai Group. The specific terms and conditions will be subject to the trademark contract that concluded by the new company and Yuchai Group.  

Industry analysts believe that, the sale of 55% Yuchai Daye Company equity probably implies Yuchai Group is shrinking its business line because the decline in the commercial vehicle sales from this year troubled the diesel engines. Yuchai is in preparation for the winter dormancy.

According to report that, Yuchai Group, known as the largest independent diesel engine manufacture base in the world, currently has a total of 33 wholly owned, holding or share-holding subsidiaries, with a staff of 60 thousand and a total asset of 13.4 billion Yuan.  

The Yuchai Group website claims that, its present core businesses include six sectors, such as diesel engine, construction machinery, auto parts, auto chemicals, logistics and special purpose vehicle; however, as a matter of fact, its real core businesses are  the diesel engine and construction machinery.  

The auto parts sector which the Yuchai Daye Company belongs to, even though has as many as 13 subsidiaries, is not strong, and most of subsidiaries are parts companies or sales companies supporting the diesel engine. Therefore, the shrinkage in auto parts sector, in fact, proves to be a choice for Yuchai to recover the resources and concentrate on the core businesses.

Author: Zhu Yu        Source: China Industry News

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