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Fuyao Climbs on China’s Shrinking Vehicle Stockpile

Post Time:Apr 03,2009Classify:Company NewsView:313

Fuyao Group Glass Industries Co., China’s biggest windshield maker, jumped to an eight-month high in Shanghai on speculation that rising car sales and slumping vehicle stockpiles will spur demand from automakers.

Fuyao rose by the 10 percent daily limit to close at 7.27 yuan. The stock has risen 87 percent this year. Xinyi Glass Holdings rose 12 percent to close at HK$3.8 in Hong Kong.

China’s vehicle stockpile fell to a two-year low in February after the government spurred demand by cutting retail taxes and pledging to hand out subsidies to help pay for smaller vehicles. Industrywide sales may rise as much as 10 percent this year, according to General Motors Corp. and Toyota Motor Corp.

“Parts-makers like Fuyao are benefiting even more than assemblers from the government’s stimulus policies as compact cars carry smaller margins for carmakers,” said Chen Liang, an analyst with Huatai Securities Co. in Nanjing, who has a ‘buy’ rating on Fuyao. “Rising vehicle production in the second quarter will also benefit Fuyao.”

Chen Yuedan, Fuyao’s board secretary, wasn’t immediately available for comments.

China’s government halved retail tax on vehicles with engines of 1.6 liters or less in January. The tax break, covering more than half the market, helped end three months of falling nationwide sales.

Source: BloombergAuthor: shangyi

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