With the rapid growth of China's automotive industry, mergers and acquisitions (M&A) have become a hot topic among investors and industry observers. Yesterday, Wu Haifeng, an executive director at UBS Securities and an analyst in the China Securities Research Department, highlighted that the conditions for M&A activities within the Chinese auto sector have significantly improved since major auto groups went public. He noted that while the industry may experience a moderate slowdown in 2008, it will continue to grow in a stable and sustainable manner.
Wu expressed a more cautious perspective on the ongoing discussions surrounding auto industry M&A. He pointed out that over the past decade, progress in this area had been limited, but the pace is now accelerating. "After the overall listing of major auto groups, the environment for M&A has become much more mature," he said.
In his opinion, the process of going public marks a crucial step for state-owned enterprises as they transition toward a more market-oriented approach. He emphasized that M&A valuations should not rely solely on book values but should instead consider market value after listing. Currently, SAIC has already gone public, Dongfeng Motor is listed in Hong Kong, and both Changan Automobile Group and Guangzhou Automobile Group are actively preparing for their own overall listings.
Moreover, Wu observed that competition in the automotive sector is intensifying, but he does not foresee a "cold winter" in the near future. Instead, he believes the industry is well-positioned to adapt and thrive despite the challenges ahead.
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