Pangda tanks on lackluster trading debut

Updated: 2011-04-29 13:58

By Fang Yan and Ai Peng-soo (China Daily)

Twitter Facebook Myspace Yahoo! Linkedin Mixx

Shares fall 20 percent despite firm raising almost $1 billion in initial offering

SHANGHAI - Shares of Pangda Automobile Trade Co Ltd fell more than 20 percent on their trading debut in Shanghai on Thursday.

The retreat came despite the Chinese car dealer raising close to $1 billion in the country's second-biggest IPO so far this year.

Pangda, based in the northern Hebei province, is now the first publicly traded car dealer in China at a time when the country's auto sector is expected to experience slowing growth after years of breakneck expansion.


Pangda tanks on lackluster trading debut

The company's trading debut also coincided with a sharp fall on the B-share market this week, amid speculation that the regulator may impose a capital gains tax on the dollar-denominated market, which caters mainly to foreign investors.

"It's not a big surprise, as quite a few companies have dropped below their IPO prices recently due to adverse market conditions," said Wu Wenzhao, an analyst at Sinolink Securities Co Ltd, referring to Pangda's trading debut. "Investors are struggling to put a fair value on a car dealer, even though Pangda has good fundamentals. I think in the long run the slump will create buying opportunities," Wu said.

Pangda's shares traded at 36 yuan ($5.54) at the open, compared with an IPO price of 45 yuan a share. It closed at 34.58, down 23.16 percent.

Pangda's IPO was the second major deal on the yuan-denominated A-share market this year following the $1.4 billion IPO of the wind turbine maker Sinovel Wind in January.

Growth in car sales in China, the world's largest auto market, is expected to slow to 10-15 percent in 2011, down from the 32 percent increase recorded in 2010, according to industry observers.

Related readings:
Pangda tanks on lackluster trading debut Chinese brands glitter at show
Pangda tanks on lackluster trading debut Craze for luxury cars in China
Pangda tanks on lackluster trading debut Auto Shanghai 2011
Pangda tanks on lackluster trading debut BMW concept M5 world premier

On top of a slowing market, Pangda, which handles the Toyota, Honda and Subaru brands, is also suffering from the effects of Japan's devastating earthquake and tsunami which has disrupted supply chains.

Mazda Motor Corp's China car sales have declined for three straight months since January, while Toyota Motor Corp said its output will return to normal in November or December.

So far this year, there has been a lack of big IPO deals on the mainland markets, with offerings by small and medium-sized companies dominating the market.

But despite the slowing growth outlook, the Hong Kong-listed automakers BYD Co Ltd and Great Wall Motor Co Ltd have said they want to return to the mainland stock market later this year.

Other Chinese companies, including Bank of Jiangsu Co Ltd and Guangdong Development Bank Co Ltd, have also said they are preparing listings on the mainland in 2011.



Green works

Wuxi becomes 'test case' for facing country's environmental challenges

The global rise of Chinese brands
China-EU trade on solid ground
ZTE banks on innovation

European Edition


 New wave

Coastal city banks on marine sector to ride next stage of economic development

Drunk driving

Drunk drivers face a detention for one to six months and a revokation of their drivers' license.

V-Day parade

A military parade marking the 66th anniversary of the Soviet victory over Nazi.

The song dynasty
Cut above the rest
Body of work