Tue, Dec 21, 2004 - Page 10 News List

Yulon Nissan foresees higher revenues

By Amber Chung  /  STAFF REPORTER

Yulon Nissan Motor Co (裕隆日產), the nation's third largest auto vendor and distributor of Nissan cars, said yesterday that revenue will grow up to 10 percent next year, bolstered by the rollout of new models and increased sales of luxury cars.

"We expected to see our revenue increase by 5 percent to 10 percent to NT$55 billion next year," Yulon Nissan's president Liu Yi-cheng (劉一震) said yesterday.

However, profits may remain at a level similar to this year -- around NT$3.6 billion -- due to increased costs following the revocation of tax breaks starting next year, Liu said.

The company saw pre-tax income of NT$3.64 billion, or NT$12.13 per share, on revenue of NT$47.4 billion from January to November this year, exceeding previous forecasts of pre-tax income of NT$3.47 billion and revenue of NT$47.7 billion, according to Yulon Nissan.

The company expects to roll out four to five new sedan and recreation vehicle models, boosting annual sales volume to 80,000 units from the current 70,000 units by 2007, Liu said.

The operating income rate is expected to rise to 8 percent from 6 percent over the same time, he added.

Yulon Nissan, with paid-in capital of NT$3 billion, was spun off from Yulon Motor Co (裕隆汽車) in a restructuring program in Oct-ober last year. The company's shares will debut on the main bourse today. The firm hopes to raise at least NT$2.4 billion, with a trading price of NT$80 per share.

The company is issuing 30 million, or 10 percent, of its shares, for the initial public offering. Yulon Motor controls 50 percent of the venture's stake, while Japan's Nissan Motor Co holds the remainder.

Market watchers expect the share price of the venture to surge to NT$100 in the next few days, given a relatively low price-earning (P/E) ratio against dazzling profits.

"Yulon Nissan is expected to create net income of NT$10.4 per share, which would be No. 1 among the nation's auto companies," said Sam Wu (吳鴻昇), an automotive industry analyst at Yuanta Core Pacific Capital Management (元大京華投顧).

A reasonable P/E ratio for the shares would be 10, compared to the current 8, to reflect its profitability, Wu said.

The company's business in China, however, has seen difficulties this year, due to cutthroat price competition in a market crowded with over 130 auto companies and the country's cooling-off measures that dampened car purchases, Wu said.

The market is expected to rebound in the second half of next year, as the Chinese government is expected to lift bans on imported vehicles on Jan. 1, Yuanta Core Pacific's Wu said.

Yulon Nissan expects to sell 100,000 vehicles in China next year, from 60,000 this year, according to the company.

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