Yulon Motor stocks soar on plan to exploit real estate

Yulon Motor Co (裕隆汽車), which assembles and sells cars for Nissan Motor Co in Taiwan, yesterday saw share prices surge after the company announced plans to develop its land holding in Taipei County to accommodate the trend of real-estate appreciation.

Shares of Yulon Motor jumped NT$1.50 to close at NT$38.80, the highest since April last year, on the Taiwan Stock Exchange.

"Landowners hoping to benefit from the rising inflation trend are turning idle land to use," said Mike Shiao (蕭光一), a fund manager at Invesco Taiwan Ltd (景順投信).

"Manufactures like Yulon can convert their old factories into more valuable property projects," he said.

Yulon Motor president Chen Kuo-rong (陳國榮) said on Thursday that the company planned to develop an abandoned factory site into a residential and commercial complex in Xindian City (新店), Taipei County.

The development of the Xindian site, which covers 30,000 ping (almost 10 hectares), is expected to create revenue of NT$32 billion (US$1 billion) and profit of more than NT$25 billion for the company, Chen said on the sidelines of a wood sculpture awards ceremony.

The expected profit of NT$25 billion is nearly twice as much as the company's current capital of NT$14.13 billion, and Yulon Motor hopes to increase its earnings per share by NT$17.7.

The company said that it expects to start booking its land development profit in 2009 at the earliest.

Development of the site is being undertaken in two phases. A plot of 11,000 ping was turned into a shopping complex in June last year following two years in construction.

The shopping cluster features an outlet of French hypermarket Carrefour SA and an auto mall, which contains automobile showrooms for Nissan, Infiniti, Renault, Cadillac, Buick and Opel brands as well as a maintenance area and restaurants.

Yulon Motor had said previously that it also plans to develop other underused sites in Chungli City (中壢), Taoyuan County, and Sanyi Township (三義) in Miaoli County.