[Vnbiz] Zhongda on road to first with Viet chassis bid

[Phan, Tai]

Zhongda on road to first with Viet chassis bid

Yvonne Lee

Thursday, February 08, 2007

Automobile equipment manufacturer Zhongda International (0909) plans to set up China's first overseas plant for the production of chassis for commercial vehicles in a US$60 million (HK$468 million) joint venture in Vietnam.
Shares in Zhongda jumped as much as 42 percent before closing at HK$0.65 Wednesday, up 34 percent from the previous trading day. The stock price has increased nearly threefold this year.

Zhongda has signed a a letter of intent with Vietnam's largest state-owned automobile manufacturer, Vietnam Motors Industry (Vinamotor) to establish a joint venture in Hanoi, to produce bus chassis. 

"The cooperation with Vinamotor marks the first startup in localization of production for commercial vehicles in Vietnam," vice chairman Zhang Yuqing said in Hong Kong. 

"As the automobile industry in Vietnam is in a preliminary stage, the import of automobiles and equipment is very expensive, therefore the government encourages international carmakers to invest in the country to enhance the industry's competitiveness and productivity," Zhang said.

Zhongda says the registered capital of the joint venture will be US$20 million. It will operate for 20 years. 

The company hopes the new plant will produce 3,000 chassis in its first year.

After three years, the annual output could jump to 20,000 chassis. 

He said a final agreement may be signed once Zhongda agrees with the feasibility study provided by Vinamotor. 

He believes the final agreement may be signed within six to 12 months.

Zhongda executive director Allan Kwok said funding could come from bank borrowings, strategic investors or equity financing.

The company had 28 million yuan (HK$28.2 million) cash at the end of June.

Zhongda reported a net profit of 6.19 million yuan for the six months ended June, down 16.77 percent compared with a year before.