China Auto Logistics, Inc., a leading developer of automobile-related websites, announced today that last week it closed a sale of three million unregistered common shares to accredited individual investors at an above market price of $1.75 per share. The sale raised a total of $5.25 million for general corporate purposes.
China Auto expects that most of the proceeds of the stock sale will be used in the second half of 2011 to complete the acquisition of an auto mall in Tianjin; the company intends to convert this location into the largest auto dealer in the city, selling over 70 different car models.
CEO and Chairman of China Auto, Mr. Tong Shiping, noted that each of the investors “clearly appreciate the strength and growth potential of our company which has been masked by the unprecedented current predicament of Chinese stocks in the U.S. Based on very thorough due diligence, these investors reached the conclusion that our Company has and will continue to be very transparent while generating outstanding performance, and believe our shares are significantly undervalued mainly because of the prevailing negativity temporarily affecting all Chinese company shares in the U.S.” He added, “They and we also strongly believe the growth in China will continue to set the pace for the rest of the world, particularly in selected industries, such as the auto industry. Auto growth is being fueled by the fact that fewer than 50 out of 1000 Chinese individuals own cars, despite the continuing high level of sales. We also anticipate the continuing rapid growth of Internet use in China, and believe our Company is very well positioned to capitalize on these converging trends.”
Commenting further on the continuing growth in China’s auto sales, Mr. Shiping stated, “The full year sales advance in 2010 above 32%, as I had said repeatedly, was unsustainable. Nevertheless, I believe we will continue to see very healthy, world leading double digit sales in 2011 and beyond, following year over year growth through the first five months this year of about 4.2%, nearly 7% growth in passenger car sales, and continuing double digit growth in luxury sales. Only recently, the Deputy Chief of the China Association of Automobile Manufacturers was quoted as saying that an anticipated drop in oil prices and increased liquidity will help boost second half sales, and executives in the industry were cited by a leading consultancy as believing growth of 12 to 15 percent annually is expected through 2016.”
“We have built CALI into China’s largest wholesaler of imported luxury vehicles with a network of more than 3000 dealers nationwide,” stated Mr. Tong, “but while these sales have continued to grow rapidly, they are still roughly 4% of total China auto sales.” He continued, “Over the past couple of years we have steadily ramped up our participation in the domestic car market, first with the creation of our highly successful domestic www.at160.com website. We then expanded our reach in this market with the acquisition of www.goodcar.cn. In our view, the acquisition of an auto mall is another key step in building a leading position in this market.”
“Prior to this stock sale, we had an already very strong financial position, with working capital of more than $37.1 million and cash and cash equivalents of $7.5 million as of the end of the first quarter. The addition of $5.25 million in cash provides us with additional flexibility in pursuing our acquisition goals this year, as well as other growth plans aimed at continuing to build CALI’s leadership in China’s Internet and auto industries,” Mr. Tong said.
“We have a very bright future,” he added, “and we will continue to provide the highest level of disclosure. We firmly believe this will lead us to be among the well deserving top companies to emerge as winners from a return in investor confidence.”