Chuanzhong Investment invests Daimler's pre-assessment positioning financial investment
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In turbulent 2012, German automaker Daimler eagerly aspired to join new investors to improve the operating environment. “Chinese customers†remained a popular candidate for this role.
As the "world's largest commercial vehicle manufacturer, the world's second-largest luxury car manufacturer, the second largest truck manufacturer", Daimler's market value in 2012 was as high as 42.2 billion euros. However, due to factors such as the persisting winter and the intensified competition in the European auto market, the weak spell of the market has also been placed on this century-old store in recent years. In October 2012, Daimler lowered its earnings forecast for the year in its third-quarter earnings: from the €9 billion in EBIT of 2011 to 11 billion euros, of which the passenger vehicle segment estimates A profit of 4.4 billion euros was obtained, compared with 5.19 billion euros in the same period of last year; the commercial vehicle market was 1.7 billion euros, which was weaker than last year's 1.88 billion euros.
The pressure placed on Daimler CEO Cai Ze should not be underestimated, because it is not only the deceleration of fiscal revenue but also the large amount of investment that needs to be paid. At this time, Daimler needed courageous investors to stand up and support their big business.
Against this backdrop, China Investment Co., Ltd. (hereinafter referred to as "CIC") is eager to share in Daimler. "Over the past two months or so, the company has conducted many internal audits on Daimler's investment. The round of discussion, now that the investment has passed the pre-trial, a CIC insider revealed to reporters the latest progress in investing in Daimler.
Re-negotiate the road
In mid-January of this year, enter "Cai Daimler" in the search box and there will be at least 412,000 links. All of these are discussing one issue - whether CIC will buy Daimler shares as rumors say.
A survey by the reporter found that the timing of the rumors of the investment in Daimler each had a surprising coincidence with the decline in the performance of Daimler. The performance announced by Daimler on April 28, 2009 shows that it had a net loss of 1.3 billion euros in the first quarter of this year, the first consecutive quarterly loss in 10 years. The Mercedes-Benz division’s sales for the first quarter fell 27% from the same period last year to 9.1 billion euros, with a loss of up to 1.12 billion euros. The company's truck division's quarterly sales fell 22% to 4.9 billion euros, a loss of 142 million euros. At that time, Daimler had stated that it was negotiating with China Investment on equity investment.
The negotiations between Daimler and CIC coincided with a decline. Mercedes-Benz lowered its profit forecast for the year in the third quarter of last year, which is also a lack of optimism for the market this year. Due to the weak demand in China's domestic market, the Mercedes-Benz Passenger Vehicles Division expects to achieve only 10% of its sales revenue in 2013.
Due to the dependence of Germany on the Chinese and US markets, the future development of Daimler is even more worrying. In terms of exports to the United States, automotive, pharmaceutical, and construction machinery products accounted for three-quarters of the growth in exports; while in terms of trade with China, product types were more concentrated, and German exports to China grew by nearly 100%. Automotive industry achieved. Daimler is in urgent need of foreign aid blood transfusion to change the status quo.
With 200 billion U.S. dollars in registered capital, China National Investment Corp. (CIC) has naturally become the owner of Daimler's eyes. The China Investment Corporation, established in Beijing on September 29, 2007, is a state-owned large-scale investment company established under the approval of the State Council of the People's Republic of China. Like the Abu Dhabi UAE, it belongs to the sovereign wealth fund of the country and has a large amount of funds to control.
At present Daimler's largest shareholder is the UAE Abu Dhabi Sovereign Fund. The Abu Dhabi Sovereign Fund invested 1.95 billion euros at the end of March 2009 to acquire Daimler’s 9.1% stake, becoming Daimler’s largest single shareholder. Other institutional investors (mainly banks, insurance companies, investment trusts, etc.) own 68.8% of Daimler Co., Ltd., while Daimler’s remaining 31.2% of the shares are 20.5% owned by private investors; 7.6% are The government of Kuwait; Renault and Nissan hold a total of 3.1%. (Equity structure as of October 11, 2012).
An insider of the China Investment Group told reporters that CIC has not become the largest shareholder of Daimler as it has been rumored to be buying more than 10% of the equity. The source said that the company expects to invest between 1.5 billion euros and 2 billion euros to buy no more than 5% of the shares.
Although Daimler did not make a positive response to the investment, the content of the reply is worth savoring. “We cannot comment on media speculation. Overall, a balanced (regional/global) shareholder structure is in the interest of Daimler, and we always welcome new investors.†In response, Deputy Secretary General of the Passenger Cars Association Cui Dongshu said that since Daimler’s own equity was too small, it was under pressure to control the company. Diluted equity was not only based on supplementary funds, but also increased demand for speaking rights.
National Securities Auto Analyst Cao He said that although CIC has not heard of investing in the domestic auto industry, it is reported that a fund of CIC has successfully acquired Honda Motors and Nissan Motors. According to sources, at the end of March 2011, a fund related to the Chinese government purchased 1.17% of Nissan’s preferred stock, worth US$52.82 million, and became Nissan’s ninth largest shareholder. The fund is called "SSBTOD05 Integrated Account Agreement Client" and its behind-the-scene investor is CIC. Since then, at the end of September 2011, the fund has acquired a 2.12% stake in Honda Motors, ranking seventh among Honda’s major shareholders.
Financial Investors
A fund company manager told reporters that in the investment industry, prequalification is only the primary process of investment projects. For example, CIC only needs to pass its own company's internal pre-review committee. The difficulty is not too great, and there is a big distance from the project.
According to the above-mentioned insiders of CIC, although the company has not yet reached an agreement with Daimler, internal investment directions have been agreed. “It is not intended to buy stocks from the secondary market, nor is it intended to occupy seats on the board of directors and the board of supervisors, it is purely investment and stock behavior, and it will not have any relationship with the auto industry.†This means that CIC invests in Daimler. It does not involve any development and management of the auto industry at all. It is simply a mere trading of stocks.
Liu Feng, a macroeconomic analyst at Southwest Securities, said that in Germany, auto companies play an important role, behind which there is strong support from the government, and the right of control is never allowed to fall into the hands of outsiders. "When Qatar invaded the public in Germany in 2009, Qatar had emotions in Germany. They are very worried that if such a good company falls into a relatively backward industrial country, it will not happen to reverse takeover, but it will become a foreign company, but it will actually operate. Look, they worry about being redundant."
Although many people believe that China's sovereign fund investment will have political and national colors, in fact, CIC has always insisted on pure investment behavior. This is also an important reason why Daimler believes in the Chinese investment. "CIC's past investment style is like playing combo boxing, which may be caused by the apparent decline in the Japanese automobile industry. CIC hopes to reduce risk through investment in new asset allocation behaviors," said Cao He.
Liu Feng said that even if the CIC does not need to consider the operation, the risk that such a large amount of investment needs to bear should not be overlooked. A fund company investor said, “From the perspective of CIC’s publicly disclosed investment experience, it has suffered a terrible failure since its inception. In 2007, when the US financial crisis triggered the subprime mortgage crisis, CIC that was still preparing for the investment was spending money. Utilizing $3 billion for $29.605 per share, Blackstone Group's 101 million non-voting shares were subscribed. By the close of January 11 this year, the Blackstone Group's share price was $16.86, and over $5 billion in more than five years. Investment float losses of about 1.3 billion US dollars.
The above analysts also pointedly pointed out that it was the CIC’s miserable lessons that delayed the Chinese auto companies’ going to sea. After the subprime mortgage crisis, CIC was the first investment company to go to the sea and it was not a smooth experience. At that time, auto companies including Beiqi did not dare to move forward and missed the best investment opportunities in recent years. Cui Dongshu believes that if Daimler can successfully introduce CIC as a shareholder, it can significantly increase its cash flow. However, it cannot be avoided that Daimler has made investors swear by the performance. The comparison of China's market performance is as follows. It can be seen that China's impact on the rankings of the three major brands: Audi sold more than 400,000 vehicles last year, an increase of 29.6% year-on-year. BMW sold 326,000 vehicles, an increase of 40% year-on-year, and Mercedes-Benz sold 190,000 vehicles throughout the year. Only 1.5% year-on-year growth.
Bloomberg said that the slowdown in the growth of business in the Chinese market, the lag in the development of compact SUVs, and the lack of influence in the young consumer groups have caused Mercedes-Benz to lose the top spot of luxury cars (BMW exceeded the Mercedes-Benz for the first time in 2005). Even the main factors that drove the wider gap between BMW and Audi. The Bernstein Research report also shows Mercedes-Benz's embarrassing situation. The market value of the Mercedes-Benz passenger vehicle business is now approximately 22 billion euros, which is only half that of BMW. "Daimler's transition in China is too slow. It lacks products suitable for the public and rapid serialization," said Cui Dongshu.
“Equity acquisition has always been an arduous process. When SAIC acquires GM, it wants to take a 5% stake, and finally only gets less than 1%. In the future, it is not easy to say how much CIC can get.†Cao He believes. Last year, due to economic stimulus policies, the United States triggered a rebound in the auto market. New car sales reached 13% throughout the year, but this high base is also difficult to maintain. He believes that the increase in the sales of new vehicles in the United States this year may well fall back to single digits. Automobile companies including Daimler will be greatly affected.