Chinese Auto Dealer Rebuts Claims It’s Reluctant to Save Stock From Delisting Territory

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Grand Automotive’s stock has been suspended from trading on the Shanghai Stock Exchange since July 18. Photo: China Grand Automotive Services Group

China Grand Automotive Services Group Co. Ltd. (600297.SH), one of the country’s largest auto dealers, has rebutted skeptics who have accused the firm of being reluctant to take action to boost its stock price, which has fallen below a threshold that triggers a forced delisting.

Some market observers argued that with more than 10 billion yuan ($1.37 billion) of monetary capital in hand, Grand Automotive should be able to make share repurchases to revive its stock.

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China Grand Automotive's stock has been suspended after falling below the 1 yuan threshold, with the company explaining that most of its 11.2 billion yuan in cash is restricted.
The firm has raised 17.37 billion yuan since 2015 to support business expansion and denied claims of purchasing overpriced intangible assets.
Grand Automotive sold 713,000 vehicles and earned 138 billion yuan in revenue in 2023, reporting a net profit of 392 million yuan after a previous loss.

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Who’s Who

China Grand Automotive Services Group Co. Ltd.: China Grand Automotive Services Group Co. Ltd., a major Chinese auto dealer, faced criticism for not boosting its stock price, now below the delisting threshold. Despite having 11.2 billion yuan, 85% is restricted for bank-related uses. The firm focuses on new-energy vehicles amid industry price wars. Trading suspended on July 18 after shares fell below 1 yuan. The company sold 713,000 passenger vehicles in 2023, earning 138 billion yuan and reporting a net profit of 392 million yuan.

Xinjiang Guanghui Industry Investment Group Co. Ltd.: Xinjiang Guanghui Industry Investment Group Co. Ltd. is the controlling shareholder of China Grand Automotive Services Group Co. Ltd. The article mentions that Grand Automotive refuted rumors of purchasing 9.8 billion yuan worth of intangible assets at a high premium from Xinjiang Guanghui, clarifying the actual value of their intangible assets and their nature.

Zhongsheng Group Holdings Ltd.: Zhongsheng Group Holdings Ltd. is mentioned in the article as the industry leader in terms of revenue, having surpassed China Grand Automotive Services Group Co. Ltd. in 2023.

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What Happened When

2023：: Grand Automotive reported a net profit of 392 million yuan, recovering from a net loss of 2.66 billion yuan in 2022. Grand Automotive sold 713,000 passenger vehicles, the highest among all of China’s auto dealers, and its revenue reached 138 billion yuan.

2023 year-end：: Grand Automotive had 11.2 billion yuan in cash and cash equivalents, 85% of which was restricted capital.

By the end of 2023：: Grand Automotive’s debt-to-asset ratio was 64%, with net assets totaling 38.97 billion yuan.

July 18, 2024：: Grand Automotive’s stock was suspended from trading on the Shanghai Stock Exchange after closing at 0.78 yuan per share the previous day.

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