Yulon Motor Co (裕隆汽車), which makes automobiles under the Luxgen brand, yesterday said its board of directors has approved the sale of wholly owned subsidiary Yuan Wen Investment Co Ltd (元文投資) to Hsian Woei Investment Co Ltd (翔韋投資) for NT$11.55 billion (US$373.1 million).
The transaction would boost Yulon Motor’s net profit by NT$2.5 billion, the company said.
“The deal will contribute earnings of per share of NT$1.59 to the company,” Yulon Motor president Yao Chen-hsiang (姚振祥) told a media briefing. “The company plans to use the proceeds to boost working capital and to strengthen the company’s financial structure.”
The deal would also help the company focus more on its core automobile business, Yulon Motor said.
The deal is set to take effect on June 3, the company said.
Hsian Woei Investment is 90.6 percent owned by Tai Yuen Textile Co Ltd (台元紡織).
Tai Yuen and Yulon Motor are both part of Yulon Group (裕隆集團), which has expanded into real estate and financial services.
Yulon Motor last month posted a 12.34 percent year-on-year decline in net profit to NT$2.04 billion for last year, down from NT$2.29 billion in 2017. Earnings per share decreased to NT$1.39 from NT$1.56 the previous year.
Gross margin slightly increased to 21.52 percent, compared with 21.26 percent, while revenue declined by 12.93 percent to NT$63.35 billion from NT$72.75 billion the previous year.
At the time, Yulon Motor told investors that it planned to launch revamped models of the Luxgen M7, S5 GT and GT220, a new seven-seater vehicle, the URX, later this year.
Yulon Motor expects sales in China to be between 12,000 and 15,000 units this year.
Yulon Motor sells Luxgen vehicles via Dongfeng Yulon Motor Co (東風裕隆), a joint venture with China’s Dongfeng Automobile Co (東風汽車).
Meanwhile, Yulon Group said it expects to get a permit to build a residential property development in New Taipei City’s Sindian District (新店) in the second half of this year, while it would take longer for the company to get a permit to build a commercial property development.
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