Guangzhou Auto may delist Denway

The South China Morning Post quoted sources as saying that China’s sixth-largest automaker, Guangzhou Automotive Industry Corp, may delist its red-chip unit Denway Motors from the Hong Kong stock market by early November. The action would come through a share buy-back after the firm concludes its long-awaited dual listing. Buying back Denway’s shares after listing may help it solve the issue of what to do with the subsidiary. The paper reported that the Guangzhou government wants only one large carmaker in the province, and the central government has not lifted its ban on the listing of red-chip companies such as Denway in the domestic market. This restriction has blocked Guangzhou Automotive’s listing, since it owns 37.9% of Denway. A buy-back would fold Denway back into Guangzhou Automotive, eliminating the hurdle to its listing.