CAAS Plans to Acquire 36.5% of Henglong Automotive Parts Company

By: ispeculatornew
Date posted: 12.26.2007 (5:44 pm) | Write a Comment  (0 Comments)

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CAAS – China Automotive Systems (Nasdaq) – (Closing Price – $8.28)

China Automotive Systems announced that it has started discussions with Hubei Wanlong Investment Co. to acquire an additional 36.5% of Henglong Automotive Parts Company.

China Automotive Systems currently owns 44.5% of Henglong Automotive Parts Company. In 2006 Henglong posted sales of USD$54.54 million, representing 57% of China Automotive Systems’ total net sales and net profit of USD$9.75 million, while CAAS’ net profit was USD$4.81 million. Acquiring a bigger portion of Henglong will obviously be beneficial.

I don’t see any reason to sell China Automotive Systems and I would continue to hold your shares. According to Yahoo Finance the insider sells that were weighing on the stock price have stopped and there was even an insider buy on Dec. 3.

The improved financial numbers, recent positive developments (US aftermarket deal) , and the halt to insider selling should all bode well for the stock price of China Automotive Systems.

Discloser: I have no position in CAAS.

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