AutoBeta(AutoBeta.net)09/24 Report--

On September 24, in response to the rumor that "Liaoning Communications Investment is considering taking the lead in privatizing Brilliance China," Brilliance Group Holdings Co., Ltd.(hereinafter referred to as "Brilliance Group") responded: "Our company has not received any relevant information, so please do not be misled by false information."

Earlier media reports said that Liaoning Province Transportation Construction Investment Group will take the lead in privatizing Brilliance China, possibly as early as the fourth quarter of this year. Affected by the news, Brilliance China rose sharply in the Hong Kong stock market, closing up 4.86% to HK $7.34.

On May 27, Brilliance Group sold 200 million shares of Brilliance China to Liaoning Province Transportation Construction Investment Group, equivalent to 3.96% of the total issued share capital of Brilliance China, according to Brilliance China disclosure announcement; on July 14, Brilliance Group sold 400 million shares to Liaoning Province Transportation Construction Investment Group again, equivalent to 7.93% of the total issued share capital of Brilliance China. Currently, Liaoning Communications Construction Investment Group owns 12% of Brilliance China.

In response to the above two transactions, Brilliance China explained that the placement was based on strategic cooperation arrangements with Liaoning Communications Construction Investment Group to further expand business development space and open up upstream and downstream industrial chains and supply chains.

Although Brilliance Group refutes rumors that Liaoning Jiaotou is considering taking the lead in privatizing Brilliance China, there is no doubt that it is facing a huge crisis.

Financial results show that in the first half of this year, Brilliance China achieved revenue decline of 23.85% to 1.45 billion yuan, net profit growth of 25.24% to 4.045 billion yuan. Among them, Brilliance BMW net profit increased by 23.4% to 4.383 billion yuan, that is to say, if excluding the profit share from Brilliance BMW, Brilliance China's overall loss reached 340 million yuan.

As the parent company of Brilliance China, Brilliance Group faces huge debt pressure. By the end of the first quarter, Brilliance Holdings had total assets of 175.437 billion yuan, total liabilities of 122.675 billion yuan and asset-liability ratio of 69.93%, according to a report released by rating agency Dongfang Jincheng. By the end of April to December 2020, the interest-bearing debt scale of the Company is CNY 43.267 billion, accounting for 63.87% of all interest-bearing debts. There is a certain debt risk in the large debt scale of the Company. Orient Jincheng further pointed out that the profits of Brilliance Holdings mainly came from Brilliance BMW, and the production and sales volume of its self-owned brand passenger cars continued to decline, the business income capacity declined, and the profitability was still weak.

With regard to debt and future development of Brilliance Group, Qi Kai, vice president of Brilliance Group, recently said,"With the improvement of business conditions and the past of the epidemic situation, we will gradually get out of the predicament."

Qi Kai said it is expected that by the end of 2025, the annual sales volume of Brilliance Group's vehicle business will reach 1.95 million vehicles. Among them, there are 650,000 Brilliance BMW passenger cars, 300,000 Brilliance Zhonghua passenger cars and 150,000 Brilliance Xinri passenger cars. Commercial vehicle plate China Morning Xinyuan 600,000, Brilliance Renault Gold Cup 150,000, trucks and special vehicles 100,000.

However, according to Brilliance China's mid-term results in 2020, the cumulative sales volume of Brilliance BMW is 262,000 vehicles, while Brilliance Renault is only 11,700 vehicles, while Brilliance China brand is currently at a standstill. With a debt of 120 billion yuan, how should Brilliance Group achieve its annual sales target of 1.95 million vehicles?

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