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Automaker falls more than 8% after admitting it may not meet target
BEIJING - Shares of Great Wall Motor Co fell the most in more than two months in Hong Kong trading on Monday. The decline came after Wei Jianjun, the company's chairman, said China's largest maker of pickup trucks may not meet its 500,000-unit sales target this year.
The automaker, which is based in Baoding, northern China's Hebei province, closed the day at HK$10.24 ($1.31), down 8.08 percent. It earlier fell as much as 11 percent, the biggest intraday drop since June 13. The benchmark Hang Seng Index gained 0.45 percent on Monday.
Great Wall Motor, however, has no plans to cut prices, Wei told reporters at a briefing in Hong Kong on Monday. China's auto sales have slowed this year after surging 32 percent year-on-year in 2010 to 18.06 million units, a record high, as the government phased out incentives and imposed purchasing restrictions to curb traffic.
"We won't blindly chase growth at the expense of profit margins," Wei said, adding that the automaker is confident about profit growth.
Wei, who set the target of 500,000 units in March, did not give a new forecast for sales.
Analysts are pessimistic about the company's sales target, too.
"It would be a surprise if the company can meet its previously set annual sales target," said Vivien Chan, a Hong Kong-based analyst at Sinopac Securities Asia Ltd. "The growth of the overall auto market in China is slowing down."
Great Wall Motor reported first-half net income of 1.81 billion yuan ($283 million), compared with 867 million yuan last year, the company said in a statement to the stock exchange in Hong Kong on Friday. Sales gained 50 percent to 13.7 billion yuan.
The automaker's Hover SUV was the best-selling in the segment in the first half, followed by Volkswagen AG's Tiguan and Honda Motor Co's CRV.
Great Wall Motor's 109 percent surge in first-half profit came as rising income spurred sales of SUVs.
First-half exports rose 45 percent to 31,168 units, the company said. The automaker will introduce the Haval H6 sport utility vehicle and Voleex C50 sedan in the second half, it said.
The company's new Tianjin plant will have an initial annual capacity of 50,000 units before expanding to 200,000 units, the company said.
Formal approval for a sale of A shares may come in a month and the company will sell shares six months after that, Wei said.
Bloomberg News
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