AutoBeta(AutoBeta.net)09/18 Report--

On September 17, Tianjin FAW Xiali Automobile Co., Ltd.(hereinafter referred to as "FAW Xiali") issued the Report on Sale of Major Assets and Issuance of Shares to Purchase Assets and Raise Supporting Funds and Related Transactions. According to the report, the overall plan of the transaction includes four parts: free transfer of shares of listed companies, sale of major assets, issuance of shares to purchase assets and raising supporting funds.

According to the report, FAW Car Co., Ltd. plans to transfer 697620651 shares of FAW Xiali held by FAW Car Co., Ltd. to China Railway Materials Co., Ltd. free of charge. In addition, FAW Xiali plans to transfer all its assets and liabilities except 17.5% equity of Xin 'an Insurance and input tax allowance to Tianjin FAW Xiali Operation Management Co., Ltd., and FAW Xiali will sell 100% equity of Xiali Operation and 17.5% equity of Xin' an Insurance to FAW shares.

At the same time, FAW Xiali plans to issue shares to China Iron Goods, Iron Goods Shares, Wuhu Changmao, Structural Adjustment Fund, ICBC Investment, Agricultural Bank Investment, Runnong Ruixing and Yidun Fund to purchase 100% equity of China Railway Wusheng Technology held by FAW Xiali in total, 100% equity of Tianjin Company held by Iron Goods Shares and 100% equity of Total Trade.

FAW Xiali said in the report that after the completion of this transaction, the company's main business will be changed to material supply chain management and track operation and maintenance technical services oriented to rail transit industry, as well as railway construction and other engineering materials production manufacturing and integration services business. In other words, if the asset sale and restructuring can be successfully completed, FAW Xiali will officially bid farewell to the automobile market.

According to the performance disclosed by FAW Xiali, farewell to the automobile market may be inevitable. The report shows that between 2018 and the first half of 2020, FAW Xiali deducted a net loss of more than 3 billion yuan. Since June 2019, FAW Xiali's vehicle production has stagnated, with only 1,186 vehicles in 2019, down 81.40% year-on-year; sales volume of only 4,023 vehicles, down 93.69% year-on-year.

In order to relieve the pressure of capital and operation, FAW Xiali had to sell or reorganize its assets. In October 2016, FAW Xiali transferred 15% shares of FAW Toyota to FAW shares twice with CNY 2.56 billion and CNY 2.923 billion; in July 2018, FAW Xiali transferred 100% shares and debts of its wholly-owned subsidiary FAW Huali Automobile Co., Ltd. at a symbolic price of CNY 1; In November 2019, FAW Xiali established a joint venture company with Nanjing Bojun New Energy Automobile Co., Ltd., and planned to transfer assets and liabilities such as land, plant and equipment of the whole vehicle to the joint venture company.

Due to successive losses, FAW Xiali stock changed to *ST Xiali in April this year. In the first half of this year, FAW Xiali realized revenue of 100 million yuan, net profit of 388 million yuan and net loss of 243 million yuan deducted.

From selling assets for self-protection to restructuring to establish joint venture company for self-rescue, and then to the present stock wearing star hat, 2020 is undoubtedly a tragic and liberated year for FAW Xiali. Xiali Automobile can be traced back to 1986 at the earliest, once known as the first brother of national car, but it is expected to come to this point. Just as FAW Xiali said, in recent years, FAW Xiali brand weakening, product positioning and configuration deviation, sales channel weakening and other reasons, resulting in continuous low sales volume, poor business condition.

In fact, FAW Xiali's current predicament is only a microcosm of the domestic auto market, such as Zhongtai, Huatai, Lifan, Hippocampus and so on are undoubtedly not part of it. For automobile factories, the era of lying to make money has passed. As the market and consumers become more mature, the stock competition makes automobile enterprises have to accelerate the upward development of technology and brand. In this context, FAW Xiali will not be the last tragic car company.

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