Foton Motor: Midline Focus on Aerospace Electromechanical: Falling Attention

Foton Motors (600166) recently announced that the Deyang City People's Government signed a Letter of Intent for Cooperation with Beijing Automobile Industry Holding Co., Ltd. and Beiqi Foton Motor Co., Ltd. This collaboration aims to establish a production company in Sichuan, with an annual output of 100,000 light trucks, including engineering vehicles. The project includes plans for construction vehicles, era light trucks, and Olympic bell light trucks. As a leading player in China’s commercial vehicle sector, Foton has consistently ranked first in sales volume for four years. In 2007, it sold over 319,573 light trucks (excluding mini-vehicles), capturing a 28.9% market share. The company also saw a significant rise in revenue from medium and heavy trucks, contributing 5.04 billion yuan to overall growth. With this new partnership, Foton is set to strengthen its position in the light truck market, which could positively impact its stock performance. Despite recent market weakness, the stock hasn’t performed well in the short term. However, from a mid-term perspective, dips may offer buying opportunities. Investors should monitor the stock closely as it continues to expand its footprint in key markets. Aerospace Electromechanical (600151) recently passed a proposal to abandon its preemptive stock option in Inner Mongolia Shenzhou Silicon Industry Co., Ltd. Instead, the company will seek a strategic partner through capital increases and share expansion. While Shenzhou Silicon currently has a 1,500-ton-per-year polysilicon project under construction, funding needs are urgent. Introducing a strategic partner could accelerate project completion, though the move may have a negative short-term impact on the stock price. In terms of technical analysis, the stock has shown strong defensive characteristics lately, maintaining a position above the 30-day moving average. It may be worth considering dips as a potential entry point, especially given the company’s focus on new energy technologies. Xianyang Divergence (000697) signed an Intentional Agreement on the Reorganization of the company with the State-owned Assets Supervision and Administration Commission of Xianyang City and Shaanxi Shenmu Chemical Industry Co., Ltd. The company, once a leader in deflection coils for CRTs, has faced declining demand due to the rise of flat-panel TVs. It is expected to report losses in 2007. Shenmu Chemical, with a registered capital of 650 million RMB, is developing a 600,000-ton-per-year coal-to-methanol project, which is a key provincial initiative. Once completed, the project is projected to generate over 1.5 billion yuan in annual sales. Given the company’s alignment with the coal chemical industry, the current stock price offers some value, and investors should pay attention to any specific reorganization details that may emerge. Shenzhen Konka A (000016) clarified that it did not acquire the Changling project. Despite this, the company remains focused on expanding its white goods business, including refrigerators and washing machines, which have higher gross profit margins than TVs and mobile phones. Konka Group has set ambitious targets for its white electricity segment, aiming for sales exceeding 1.5 million units and 2 billion yuan in revenue by 2008. Although last year’s white goods sales were around 1 billion yuan, the company is still in the early stages of this strategy, primarily targeting second- and third-tier cities and rural markets. Konka is actively pursuing mergers and acquisitions, partnerships, and investments to meet its goals. The clarification about the Changling project does not hinder future expansion plans. From a technical standpoint, the stock has outperformed the broader market recently and is likely to maintain its strength in the near term. For more information: Beiqi Futian, Futian Automobile brand value of 22.157 billion yuan.

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