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    000625   CNE000000R36

CHONGQING CHANGAN AUTOMOBILE COMPANY LIMITED

(000625)
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Exclusive: Huawei-Changan smart car partnership expands to include chips - sources

05/21/2021 | 03:57am EDT
FILE PHOTO: Auto Shanghai show in Shanghai

BEIJING/HONG KONG (Reuters) - China's Huawei Technologies is expanding its smart car partnership with state-owned Chongqing Changan Automobile Co Ltd to include the design and development of auto-use semiconductors, four sources with knowledge of the matter said.

The two companies, which unveiled their smart car tie-up in November, have been working together informally on chips for the last few months, two of the sources said. A third source said they might soon form a joint venture for chip development.

Shares in Changan rocketed higher on the news, closing up 8.5% compared to a 4% decline earlier in the day.

Huawei has pivoted to electric vehicles after its global smartphone business was hammered by U.S. sanctions. The previous Trump administration labelled the company a threat to U.S. national security - a charge it denies.

In addition to the deal with Changan to develop smart cars under a joint as-yet-unnamed brand, Huawei is also planning EVs under its own marque and is in talks to take control of a small domestic automaker's EV unit, sources have said.

Huawei's new chip partnership with Changan would come amidst a global semiconductor shortage that has hit automakers particularly hard.

It would also represent a significant expansion for Huawei's chip business after U.S. sanctions meant it lost access to the underlying chip design software needed for more advanced chips used in smartphones.

The sources declined to be identified as they were not authorised to speak to media.

Changan did not respond to a request to comment. Huawei said it defers to automakers in public announcements regarding their tie-ups. Battery maker CATL, which is also part of the smart car partnership, also did not respond to a request for comment.

Changan, which has partnerships with Ford Motor Co and Mazda Motor in addition to making its own cars, has been working on developing its own chips but has not made much progress, two sources said.

Huawei and Changan's smart car partnership calls for the tech giant to be in charge of the vehicle's operating system and cabin technologies while the automaker would be in charge of vehicle design and engineering.

Two sources said the partnership would build cars that would target the mid to high-end market, competing with Tesla Inc and Nio Inc.

The business will be housed in an old venture with Nio that is no longer active and has been renamed Avatar, they added.

The companies aim to begin sales early next year, said one source. Another source added that Avatar will open an office in Shanghai and has started hiring staff.

Avatar might go public, Changan said on Friday on a question and answer service for investors managed by the Shenzhen stock exchange.

Earlier this week, sources told Reuters that Changan plans to list its EV unit, which is separate from Avatar, on Shanghai's Nasdaq-style STAR Market. Changan did not respond to a request for comment.

(Reporting by Yilei Sun in Beijing and Julie Zhu in Hong Kong; Additional reporting by David Kirton in Shenzhen; Editing by Edwina Gibbs)

By Yilei Sun and Julie Zhu


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
CHONGQING CHANGAN AUTOMOBILE COMPANY LIMITED 5.75% 19.13 End-of-day quote.22.40%
CONTEMPORARY AMPEREX TECHNOLOGY CO., LIMITED 7.16% 569 End-of-day quote.62.06%
FORD MOTOR COMPANY -4.99% 13.32 Delayed Quote.59.50%
MAZDA MOTOR CORPORATION 0.19% 1038 End-of-day quote.50.00%
NASDAQ COMP. 0.13% 14780.533084 Real-time Quote.13.91%
NIO INC. 1.17% 45.09 Delayed Quote.-8.56%
SHENZHEN STOCK EXCHANGE A SHARE INDEX 1.72% 2579.9148 Real-time Quote.4.05%
TESLA, INC. 0.17% 710.92 Delayed Quote.0.58%
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Financials
Sales 2021 99 447 M 15 379 M 15 379 M
Net income 2021 4 535 M 701 M 701 M
Net cash 2021 27 953 M 4 323 M 4 323 M
P/E ratio 2021 9,97x
Yield 2021 1,81%
Capitalization 153 B 19 649 M 23 628 M
EV / Sales 2021 1,26x
EV / Sales 2022 1,13x
Nbr of Employees 40 298
Free-Float 56,9%
Chart CHONGQING CHANGAN AUTOMOBILE COMPANY LIMITED
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Mean consensus BUY
Number of Analysts 3
Last Close Price 5,26 CNY
Average target price 6,37 CNY
Spread / Average Target 21,1%
EPS Revisions
Managers and Directors
Hua Rong Zhu President, General Manager & Director
Bao Lin Zhang Chairman
Qi Hong Dong Chairman-Supervisory Board
Xiaosheng Tan Independent Director
Yong Pang Independent Director
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