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Bus shares turned gorgeous to build China's largest listed auto parts company

The bus shares recently released the "Report on Major Asset Sale and Issuance of Asset Purchase Related Assets and Related Party Transactions," marking a major milestone in the company's restructuring plan. This move has been closely watched by investors and industry observers, as it signals a strategic shift in the company’s direction. Over the years, the public transport and taxi business—once the core of the Bus Group—has faced declining profits due to various market pressures. Since 2005, earnings per share, after excluding non-recurring gains and losses, have dropped from 0.12 yuan to 0.06 yuan, showing a consistent downward trend. To ensure long-term sustainability and create more value for shareholders, the company has decided to restructure its operations, exiting the public welfare bus sector and transitioning into the auto parts industry. Once the reorganization is complete, the bus shares are expected to transform into one of the largest listed auto parts companies in China's A-share market. With the backing of SAIC, a global top 500 company, the restructured entity aims to become a world-class auto parts supplier, following a strategy of “neutralization, zero-levelization, and internationalization.” New Perspective: Decryption of the “5+3” Advantage Why is the bus company shifting to the auto parts industry? The transformation is supported by five external advantages and three internal strengths, collectively known as the “5+3” advantage. External Advantages: First, the auto parts industry is moving toward global neutrality, with major automakers sourcing from fewer, more integrated suppliers. Second, favorable national policies support the growth of China’s auto parts industry, aiming to build competitive clusters within the next decade. Third, the continued expansion of China’s automotive market will drive demand for auto parts. Fourth, increasing private car ownership boosts the aftermarket parts sector. Fifth, China’s cost advantage in auto parts manufacturing is leading to higher export volumes. Internal Advantages: After reorganization, the company will benefit from a mature auto parts supply chain under SAIC, covering key areas such as interior trim, lighting, and powertrain components. Companies like Yanfeng Visteon and Valeo Electric have established strong market positions. SAIC’s independent auto parts division also boasts a complete industrial chain, advanced R&D capabilities, and successful joint ventures with global leaders. New Speed: Future Strategy for Sustainable Growth Post-reorganization, the company plans to focus on three strategies: neutralization, zero-levelization, and internationalization. It aims to expand nationwide, align with vehicle manufacturers, and integrate into the global supply chain. Through mergers, acquisitions, and strategic partnerships, the company seeks to enhance its technological edge and global presence. According to Deloitte’s profit forecast, the company’s earnings per share are expected to rise significantly post-transaction, reaching 0.445 yuan in 2007 and 0.24 yuan in 2008, representing a substantial increase compared to pre-transaction levels. These improvements indicate a strong outlook for future profitability and sustainable growth.

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