December 7, 2009 / 10:56 PM / in 9 years

UPDATE 2-China's Geely seeking acquisitions, upbeat on sales

* Seeking to buy assets, including parts and engines

* To boost capex by up to 43 pct to about 1 bln yuan in 2010

* Aims to lift 2010 sales by one-third to 400,000

* Had talks on GM’s Saab, unsure if talks will revive

* Shares jump as much as 7.4 pct to record high (Add executive quotes and details)

By Joanne Chiu

HONG KONG, Dec 7 (Reuters) - China’s Geely Automobile Holdings Ltd (0175.HK), whose parent is bidding for Ford Motor’s (F.N) Volvo car unit, said it aims to sell a third more vehicles next year and will continue to seek acquisition opportunities, sending its stock to a record high on Monday.

“The battered U.S. and European auto markets continue to provide us with buying opportunities,” Lawrence Ang, an executive director of Geely Auto, told reporters after the company’s shareholder meeting.

Geely, China’s largest private car maker, had been in talks on General Motors’ [GM.UL] Saab unit, which GM has put up for sale, but the talks ended without result some time ago, he said.

“I had looked into Saab, but GM did not come back to us. Maybe they find our terms were not good enough,” Ang said.

Asked whether the talks would be revived, he replied “If they could not find a buyer, they may come back to us, who knows?”

Geely, which is trying to move into the higher-end of China’s car market, is interested in acquisitions that would bolster its parts and engines production.

Ang admitted that if there was no global financial crisis, Ford might not select its parent Zhejiang as preferred bidder for its money-losing Swedish unit Volvo.

Zhejiang Geely Holdings was seeking at least $1 billion in loans from Chinese banks to finance its $1.8 billion bid, sources told Reuters in December. [ID:nHKG130867]

Geely focuses the mass market with models such as the Free Cruiser and Geely Kingkong, which sell for as little as 40,000 yuan ($5,859). In contrast, Volvo’s top of the line XC 90 sells for up to $205,000 in China.

UPBEAT SALES TARGET

Shares of Geely rose 7.4 percent to an all-time high of HK$4.38 in a broader Hong Kong market .HSI down 0.6 percent.

Analysts said the stock rally was fuelled by Geely’s bullish car sales target for 2010 and good sales number in November in China, the world’s largest auto market.

“China’s November car sales growth was good and that helped boost market sentiment on the auto market,” said Vivien Chan, an analyst at Sinopac Securities.

But she also said Geely’s share price, which has risen more than 500 percent this year, was high and fully reflected the good news that its parent may buy Volvo.

“If Zhejiang Geely wins the bid, it will take at least one to two years for the listed company to implement a co-operation plan in China for the two brands,” she added.

Geely was optimistic about China’s car market and aimed to sell 400,000 vehicles next year, up from a target of 300,000 for 2009.

“There is a chance that China’s car sales next year will be better than this year,” Ang said.

Sales in China’s auto market are expected to rise 45 percent to a record in 2009, while growth is likely to slow down in 2010 to a still robust 10-15 percent, industry experts forecast.

Geely Auto raised $334 million earlier this year by issuing convertible bonds and warrants to an affiliate of Goldman Sachs (GS.N). Part of the proceeds would be used to fund acquisition plans, Ang said.

It paid up to $40 million for an Australian automatic transmission supplier Drivetrain Systems International in the first half of the year. [ID:nHKG66222]

Geely Auto also aimed to lift capital spending by as much as 43 percent next year to about 1 billion yuan, initially for expanding capacity and building a new model platform, he said. (Writing by Alison Leung; Editing by Chris Lewis and Lincoln Feast)

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