Yulon plans to develop idle real estate

Yulon Motor Co (裕隆汽車) said yesterday it planned to spend NT$7 billion in two years turning an abandoned factory site into a shopping mall in Taipei's suburbs.

As part of the company's plans to dispose of its idle land, Yulon aims to develop a shopping mall in Hsintien where consumers will be able to shop at the French hypermarket Carrefour SA, buy automotive items, shop at a bookstore or dine in restaurants.

Auto maintenance services will be also available, the company said.

The nation's third-largest auto maker expects to recoup NT$4 billion of the construction costs in 10 years after the 11,000-ping mall starts operating in early 2005, Yulon vice chairman Kenneth Yan (嚴凱泰) said during the groundbreaking ceremony for the shopping mall in Hsintien.

"Construction of the complex is one part of a larger land cleanup and reorganization plan," Yulon Motor president Chen Kuo-rong (陳國榮) told reporters on the sideline of the groundbreaking ceremony.

The company also plans to develop other underused sites in northern and central Taiwan, including 5,000-pings of land in Chungli, Taoyuan County, and 604,966-pings of land in Sanyi, Miaoli County.

Yulon is scheduled to sign leasing contracts with potential tenants, including hypermarket retailers and restaurateurs, in the middle of next year.

The complex is expected to generate more than NT$10 billion in sales annually, Chen said.

"This is a substantial step for Yulon to transform the company into a manufacturing service provider from a [auto] manufacturer, following last month's spin-off," Yen said.

Yulon Motor was divided into two companies, Yulon Motor, which will continue engaging in original equipment manufacturing, and Yulon Nissan Co (裕隆日產), which will focus on investment projects in China together with Nissan as well as all Nissan-car related business in the greater China region.

Following the completion of the shopping mall, the company said it will engage in the construction of a residential-office complex in 2006, using a portion of the 30,000-pings of land adjacent to the mall, Chen said.

"One option for us is to turn the land in Sanyi into a recreational park," Chen said.

Yue Yuen Construction (裕元建設), a land-developing consultant arm of Yulon Group, is conducting a development evaluation, he added.

Yulon shares rose by 0.96 percent to end at NT$42 each on the TAIEX yesterday.

Asked about the performance of Yulon's Chinese unit, Fengshen Automotive Co (風神汽車), a joint venture with China's Dongfeng Corp (東風汽車), Chen said the unit's sales are expected to skyrocket by 50 percent to 65,000 vehicles this year from last year's 43,000.

Fengshen's net profit ratio is expected to rise to 10 percent next year, said Chen, who declined to give details about earnings forecasts for next year.