Fuyao Glass Group Industries said that its plan to sell a stake to a unit of Goldman Sachs has been blocked by the China Securities Regulatory Commission (CSRC), which believes the price to be too low…
Fuyao Glass Group Industries said that its plan to sell a stake to a unit of Goldman Sachs has been blocked by the China Securities Regulatory Commission (CSRC), which believes the price to be too low, the China Securities Journal reported. Fuyao Glass, based in China“s south-eastern Fujian province, approved a plan in 2006 to sell 111.28 million new shares to GS Capital Partners Auto Glass Holdings, and the deal was approved by the Ministry of Commerce in August 2006. However, the CNY 8 per share selling price is far lower than the market price of around CNY 30, and the CSRC was concerned that the deal could lead to discontent among investors, the China Securities Journal said. Analysts suggest that Fuyao“s prospects are better than the share price suggests, with strong demand and higher production capacity set to boost profits. Two new float lines will push up earnings further in 2008 and 2009, Credit Suisse said in a note to investors in September 2007. The company“s net profits in the first three quarters of the year were CNY 652.7 million, up 45.4% year-on-year on the back of stronger original equipment manufacturer (OEM) sales, with sales of windshields up 20.5%. In August 2007, the CSRC rejected an attempt by another Goldman Sachs unit to buy a 10% stake in a subsidiary of Midea, a leading Chinese appliance maker, also over concerns that the price was below market value.