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Guangzhou Auto to have HK listing hearing Thursday


3:57 pm
May 1, 2010



posts 215

Guangzhou Automobile Group, parent of Denway
Motors (0203.HK), will have its listing plan reviewed by the Hong Kong
stock exchange on Thursday, paving the way for the privatisation of the
unit, sources said.

Trading in shares of Denway, a Chinese partner of
Honda Motor Co (7267.T), was suspended on Thursday pending the release
of price-sensitive information relating to Guangzhou Auto's listing
plan, the company said in a statement to the Hong Kong stock exchange.

Guangzhou Auto, China's sixth-largest carmaker,
has applied to list in Hong Kong by way of introduction, meaning no new
money will be raised during the process.

Guangzhou Auto's listing plan through Denway will
allow the company to simplify its structure for investors by taking its
listed Denway unit, and replacing it with shares of the parent company.

The stock exchange listing committee would hear
the listing plan on Thursday, sources told Reuters.

Denway said in January that its shares would be
exchanged for new shares of Guangzhou Automobile.

Denway shares, which doubled last year, were up
nearly 10 percent in the past week to close at HK$4.56 on Wednesday on
hopes that Guangzhou Auto would pay a premium for the privatisation.

"It is still unclear whether Guangzhou Auto will
pay a premium," said Rebecca Tang, an analyst at CIMB-GK.

Tang valued Denway shares at HK$4 each based on a
price-earnings multiple of 11 times, the same as its peers listed in
Hong Kong.

Guangzhou Auto, a Chinese partner of Honda and
Toyota Motor Co (7203.T), directly and indirectly holds about 38 percent
of Denway.

Most foreign investors are barred from investing
in companies listed on mainland China stock exchanges, making Hong Kong
the primary listing option for those companies wanting to reach
international investors, analysts said.


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