ASIAN AUTOMOTIVE NEW SLETTER

JUNE 2011, ISSUE 67 A Quarterly newsletter of developments in the auto and auto components markets

Chinese companies are buying up assets offices in all of the major Asian across the Auto sector worldwide. automotive markets, as well as London CONTENTSC O N T E N T S paid US$2.7bn for Volvo in 2010, Joyson and New York. If you are interested in agreed to buy Preh for US$721m in April, discussing any of the articles in this C H I N A 1 Auto announced plans to acquire newsletter, or how we can help you in H O N G K O N G 4

Inalfa Roof Systems for US$370m in this sector, please contact me directly. I N D I A 4 April, and and I N D O N E S I A 5 Pangda recently agreed to acquire Saab for US$250m. Expect to continue J A P A N 5 hunting for foreign assets. K O R E A 5

Charles Maynard M A L A Y S I A 5 Business Development Asia LLC (“BDA”) Senior Managing Director, PHILIPPINES 5 is an investment banking firm which [email protected] specializes in Asian M&A. We have T A I W A N 5

China

AutolivAutoliv, the Swedish auto component manufacturer, plans to invest US$10m in a new belt plant in , China. The new plant will replace Auto Sector Stock Indices (12 months ending 27 Jun11 ))) Autoliv’s existing plant in the region and 210 will be 1.5 times larger than the existing plant. The move is part of the 190 company’s strategy to enhance capacity 170 and market presence in China. 150 April 4, 2011 130

Beijing Auto Works (BAW), the Chinese 110 auto manufacturer, plans to invest 90 US$100m to establish a JV with an 70 undisclosed local manufacturer in Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Russia's Ulyanovsk region. Initially, the JV will focus on assembly of BAW’s B40 CHINA INDIA JAPAN KOREA US Euro utility vehicles and later expand to Source: Capital IQ, BDA include other commercial vehicles. April 14, 2011

Beijing Hainachuan AutAutoooo (BHAP), a subsidiary of Chinese auto manufacturer Beijing Auto Group

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A SIAN AUTOMOTIVE NEWS LETTER J U N E 2011, ISSUE 6 7

Auto LTM Trading Multiples ((17171717JunJunJunJun11111111)))) Dalian, China. The plant will be Subaru’s second overseas plant after the USA and it will have a capacity of 18.0x 150,000 vehicles. The JV will help 16.1x to improve its brand image and will help 16.0x 14.7x Subaru to establish a presence in the 14.0x growing Chinese auto market. 12.0x 11.1x 11.5x 10.4x 10.4x March 3, 2011 10.0x 8.2x 8.0x 8.0x Dongfeng Peugeot Citroen Auto 5.7x 5.7x 6.0x 4.9x (DPCA), the JV between PSA Peugeot 3.6x Citroen and the Chinese auto 4.0x manufacturer Dongfeng MotorsMotors, has 2.0x agreed to set up its third plant in 0.0x Wuhan, China. The plant will commence China India Japan Korea US EU operations in 2013 and it will enable EV / EBITDA P/E DPCA to increase its domestic capacity Source: Capital IQ, BDA to 300,000 units and expand its product segments in the next five years. May 21, 2011

(BAIC), has agreed to acquire 100% of majority stake in Chinese motorcycle Dongfeng Yueda AutoAuto, the JV the Dutch auto component manufacturer, Qingqi Motorcycle between Dongfeng Motors and Korean manufacturer Inalfa Roof SystemsSystems,,,, for CoCoCo,Co for US$46m. The acquisition is part auto manufacturer Kia MotorsMotors, plans to US$370m. The acquisition is part of of Jinan’s ongoing restructuring program set up its third plant in Nanjing's BHAP’s international strategy to expand and will provide Changan a significant Jiangning Economic Development Zone. to the global auto components market market share in the domestic The plant will commence operations in and will also help BHAP to further motorcycle market. March 17, 2011 2012 with a capacity of 300,000 diversify its product portfolio, vehicles. The expansion will help the strengthen its R&D and marketing AutoAuto, a JV company to ease its capacity capabilities. April 30, 2011 between FordFord, Mazda and Chinese auto constraints as domestic sales increase manufacturer Changan AutoAuto, has significantly. March 05, 2011 Beiqi Foton MotorsMotors, the Chinese signed a MoU with the commercial vehicle manufacturer, plans government authorities to set up a FAW GroupGroup, the Chinese auto to invest US$400m to build a new plant transmission parts plant for US$350m. manufacturer, plans to invest US$1.5bn in Maharashtra, India. The plant will The plant will commence operations by to establish a R&D center for new commence operations in 2013 with a end of 2013 with a capacity of 400,000 energy vehicles in China. The R&D capacity of 100,000 units, and it will six-speed automatic gearboxes. The center will be responsible for manufacture light, medium and heavy move is part of Ford’s strategy to developing pure and hybrid electric trucks for the domestic market. leverage advanced global technologies vehicles as well as vehicles based on May 04, 2011 to build 15 new vehicles in China by hydrogen and biomass fuel technology. 2015. May 23, 2011 The R&D center will help FAW to develop Beiqi Foton Motors plans to set up a its own brand of new energy vehicles for plant in Kenya, East Africa. The plant Chery AutoAuto, the Chinese auto the domestic markets. April 25, 2011 will commence operations in May 2012 manufacturer and Subaru AutoAuto, the with over 500 employees and capacity auto manufacturing division of Fujian Daimler AutoAuto, the JV between of 10,000 vehicles. April 9, 2011 Japanese transportation conglomerate Daimler AGAG, Fujian Motors and China Fuji Heavy IndustriesIndustries, plan to jointly Motor CorpCorp, has agreed to invest Changan Auto has agreed to acquire a invest US$365m to set up a plant in US$500m to establish a new R&D center

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A SIAN AUTOMOTIVE NEWS LETTER JUNE 2011, ISSUE 67 in Fujian's capital of Fuzhou by the end of 2011. The R&D center will help Auto LTM Price/Rev Ratios ((17171717JunJunJunJun11111111)))) Daimler increase its localization rate 1.2x and also provide certain testing 1.0x facilities for its vehicles. May 1, 2011 1.0x 1.0x

Great Wall MotorsMotors, the Chinese auto 0.8x manufacturer, has signed a MoU with UK based engineering company Ricardo PlcPlcPlc to jointly develop high-end gasoline 0.6x 0.5x 0.5x and diesel engines and 6-speed double 0.4x 0.4x clutch automatic transmissions (DCT) 0.4x for SUV series. The agreement will enable to bridge the 0.2x technology gap with its foreign competitors. May 25, 2011 0.0x

Source: Capital IQChina India Japan Korea US EU Great Wall Motors has agreed to invest an additional US$640m for the Price / Revenue construction of the third phase of its new plant in Tianjin. It will commence burden. April 13, 2011 PREH to significantly improve its market operations in 2015 with a capacity of position in China. April 12, 2011 300,000 vehicles and will be JAC MotorsMotors, the Chinese auto responsible for manufacturing three manufacturer, plans to establish a Lifan Industrial GroupGroup, the Chinese luxury SUV and five luxury sedan second plant in province for auto manufacturer, and Effa Group the models. March 11, 2011 US$340m. The new plant will Brazilian importer of Chinese vehicles commence operations at the end of have agreed to jointly set up a R&D Haima AutoAuto, the Chinese auto 2011 with a capacity of 24,000 vehicles center in Brazil for US$70m. The R&D manufacturer, plans to invest US$462m and will be responsible for center will be completed by 2014 and to set up a plant in Zhengzhou, China. manufacturing six different models. will be responsible for developing This will be Haima’s third plant in China May 4, 2011 compact and alternative energy and will increase its capacity to over motors primarily for the US market. 200,000 vehicles. The new plant will JiJianghuai AutoAuto, the Chinese auto March 24, 2011 enable Haima to expand its product manufacturer, plans to raise US$426m offering and manufacture subcompacts by issuing an additional 150m shares in Michelin has agreed to set up a JV with and minivans for the domestic market. the open market. The funds would be Chinese tire manufacturer Double Coin May 17, 2011 used to expand the capacity of HoldingsHoldings, a unit of Shanghai Huayi passenger cars and high end gasoline GroupGroup, for manufacturing passenger Haima StockStock, the parent company of engines. March 22, 2011 and light truck tires in China. As per the Haima AutoAuto, has agreed to buy Haima agreement Michelin will acquire 40% Investment Group’s 38% in Haima Joyson Investment HoldingHolding, the stake in Double Coin’s plant under Auto for an undisclosed amount, Chinese auto component manufacturer, construction in Shanghai with a thereby increasing its stake to 100%. has agreed to buy 75% of German auto capacity of 15m tires. April 20, 2011 Due to the ongoing construction of component manufacturer PREH for Haima Auto’s Zhengzhou plant, the US$721m. The acquisition will provide Shanghai VolkswagenVolkswagen, the JV between company has been facing severe strain Joyson access to advance technological Group and Chinese auto on its finances and the funds from the capabilities for electronic controls and manufacturer Shanghai Automotive stake sale would help ease the financial multi-shot processing and will help Industry Corporation (SAIC), plans to

4 A SIAN AUTOMOTIVE NEWS LETTER JUNE 2011, ISSUE 67 set up its sixth plant in Ningbo, Mianyang Huarui Auto for US$14m. TiresTires, a subsidiary of Modi Rubber for Zhejiang. The expansion will help the Mianyang will become a subsidiary of an undisclosed amount. The acquisition company to ease its current capacity Brilliance Auto and will enable them to will enable Continental to increase its constraints and increase market share establish a manufacturing base in local production of truck and bus tires in South China from the current 12% to South China. March 29, 2011 and provide more competition to other 20% over the next few years. May 12, 2011 local tire manufacturers such as Apollo, Ceat, JK Tires and MRF who currently TRW Auto HoldingsHoldings, the US auto dominate the market. April 18, 2011 component manufacturer, plans to set India up a new technical center in Anting, Dana HoldingsHoldings, the US based which will be responsible for Atul AutoAuto, the Indian three wheeler component manufacturer, has agreed to R&D, engineering, design & application, manufacturer, plans to acquire the 95% acquire 100% of Axle India’s testing and validation activities for all of stake held by the Government of India commercial vehicles axle business for TRW's product lines. The center will (GoI) in the Indian two wheeler US$13m. The acquisition is part of commence operations in 2013 and will manufacturer ScooScooters ters India (SIL). GoI Dana’s strategy to expand its Indian be TRW’s largest technical facility is planning to divest its holding in SIL operations and increase its presence in globally with a capacity for more than as part of the company’s revival the Indian commercial vehicle segment. 1,000 engineers. April 29, 2011 strategy. In March 2009, SIL was April 26, 2011

declared in poor condition and referred Ford Motors plans to invest US$72m in Zhejiang Youngman Lotus to the Board for Reconstruction of its existing Chennai plant to expand AutomobileAutomobile, a Chinese carmaker, Public Sector Enterprises for revival of engine manufacturing capacity from the agreed to buy 30% of Saab AutoAuto, a its operations. May 20, 2011 current 250,000 units to 330,000 units subsidiary of Swedish carmaker Spyker by June 2012. The expansion will CarsCars, for US$197m. Working with BMW plans to add two new strengthen existing capacity and Youngman on the deal, Chinese manufacturing units to its existing plant support the launch of eight new global distributor Pangda Automobile agreed in Chennai, India. The move is part of Ford vehicles in India. May 18, 2011 to buy 24% of Saab for US$154m. The the company’s strategy to expand deal announcements come after capacity and regain its market share in Mazda Motors plans to establish a JV Beijing-based carmaker Motor the Indian market from competitors with an undisclosed Indian auto saw its bid for Saab collapse after such as AudiAudi, Mercedes Benz and manufacturer in India. The JV will be failing to get government approval. The Rolls RoyceRoyce. May 13, 2011 responsible for manufacturing small new deals need approval from hatchback and sedan segment cars, numerous authorities, most notably the Bosch Electrical Drives IndiaIndia, the JV particularly the Mazda 2 . The JV will Chinese government, which has been between Bosch Group and Indian auto help Mazda to establish its presence in pushing since 2009 to consolidate the component manufacturer Igarashi the growing Indian auto market. market so that 10 companies have 90% Motors IndiaIndia, plans to set up a plant in May 16, 2011 market share. Youngman is not a top 10 Chennai to produce wiper systems, carmaker, so there is doubt about the engine cooling fan modules, HVAC Ruia GrouGroupppp, the Indian business deal succeeding. June 16, 2011 blowers and window lift drives products conglomerate, has acquired 100% of for an estimated cost of US$9m. The French automotive sealing company, plant will commence operations by the Sealynx Auto for an undisclosed Hong Kong end of 2012 and will enable the amount. The acquisition will help Ruia’s company to increase localized strengthen its European operations and manufacturing levels. May 26, 2011 Huachen Auto GroupGroup, the Hong Kong boost the group’s global presence in the based parent company of Chinese auto auto sealing segment. May 18, 2011 Continental AGAG, the German tire manufacturer Brilliance AutoAuto, has agreed to acquire 100% of Chinese manufacturer, has agreed to acquire Ruia Group plans to acquire 66% of pickup trucks and SUV manufacturer 100% of Indian tire manufacturer Modi Noida based light manufacturer Halonix

5 A SIAN AUTOMOTIVE NEWS LETTER JUNE 2011, ISSUE 67 from Actis private equity for US$60m. capacity of 50,000 vehicles and would the end of 2011 in Ziyang City for Actis is currently looking to divest only enable the company to tap the auto manufacturing high end commercial the auto lighting business of Halonix markets like Indonesia, Philippines, vehicles in China. As per the agreement, while the general lighting business Malaysia and Thailand. March 3, 2011 Sichuan Hyundai will initially use would be divested at a later stage. Nanjun Auto’s existing facilities but will May 17, 2011 Motors plans to increase its invest in establishing a new plant with a capacity at the Karawang plant from the capacity of 150,000 trucks and 100,000 Ruia Group has also acquired 100% of current 100,000 units to 140,000 units buses. May 3, 2011 two auto components manufacturing by early 2013. The expansion will firms; Turkey’s Standard Profil and enable the company to expand the Germany’s Gummiwerke for an range of models manufactured for the undisclosed amount. The acquisitions Indonesian market and strengthen its Malaysia will provide the group a significant domestic presence. May 25, 2011 market share in the European rubber ProtonProton, the Malaysian auto sealing systems segment. May 11, 2011 Volkswagen plans to set up its first manufacturer, plans to invest US$260m

assembly plant in Indonesia for towards restructuring its UK subsidiary Tata AutoCompsAutoComps, the India auto US$140m. The plant with a capacity of Lotus CarsCars. Proton aims to revive the component manufacturer, has signed a 50,000 vehicles will initially assemble loss making Lotus as a premium sports MoU with Japanese heat exchanger only the Touran compact MPVs and later car maker by 2015 and leverage on the manufacturer TRADTRAD, to jointly set up a expand to include other models as well. brand's strengths to build better cars, R&D facility in Pune, India. The R&D The plant will help VW to establish a improve the Proton brand and tap new center will be responsible for presence in the growing Indonesian markets overseas. May 25, 2011 developing new capabilities for auto market. May 10, 2011 aluminum based radiators, inter coolers, heater cores and exhaust gas recharge systems for the Indian auto Philippines sector. May 26, 2011 Japan

Chery AutoAuto, the Chinese auto Toyo TiresTires, the Japanese tire manufacturer, plans to build a plant in manufacturer, has agreed to acquire Indonesia the Philippines over the next three years 75% of the Chinese tire manufacturer to cater to the increasing demand for

Shandong Silverstone Luhe Rubber & left hand drive vehicles in the ASEAN DaihatsuDaihatsu, a subsidiary of Toyota Tire Company from Lion Rubber markets. The plant will manufacture MotorsMotors, plans to set up a plant in Industries Malaysia for US$22m. Toyo Philippine specific passenger cars and Jakarta for an estimated cost of currently caters only to passenger car small vehicles and will also introduce US$240m. The plant will commence tires segment from its plant in Jiangsu cheap electric vehicles to the domestic operations in 2013 with a capacity of province and the acquisition will enable and ASEAN market. April 25, 2011 100,000 vehicles and will initially the company to cater to the demand for assemble low cost compact cars for the truck and bus tires as well. April 12, 2011 domestic market. The expansion will also help Daihatsu to expand its Taiwan presence in other ASEAN markets. May 26, 2011 Korea Foxconn TechnologyTechnology, the Taiwanese

electronics manufacturer, has agreed to Tata MotorsMotors, the Indian auto Hyundai Motors has agreed to set up a sign a partnership agreement with the manufacturer, plans to set up a plant in 50:50 JV, Sichuan HyundaiHyundai, with Chinese auto manufacturer, JAC Jakarta, Indonesia for manufacturing the Chinese auto manufacturer SichSichuan uan MotorsMotors, to jointly focus on new energy Tata Nano . The plant will have a Nanjun Auto Group (Nanjun Auto) by vehicle development and auto

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electronics R&D in China. The Tong Yang IndustrialIndustrial, the Taiwanese auto components manufacturer, has partnership will last until April 2013 and will primarily be responsible for agreed to set up a 49:51 JV in the Hunan development of electric battery province with Chinese auto technology, traditional fuel powered manufacturer Guangzhou Auto GroupGroup, vehicle production, magnesium for US$18m. The JV will commence aluminum alloy weight optimization and operations in mid-2012 with a capacity R&D in interior LED screens. JAC is of 400,000 units. The JV will provide expected to benefit from the Foxconn’s Tong Yang access to the supply chains advanced technical knowledge for of other JVs between Guangzhou Auto developing electric vehicles in China. and foreign partners such as Honda and April 24, 2011 Toyota. April 2, 2011

Asian Auto Transactions with Multiples (12 months ending 17 Jun 2011 )))

Announce Acquirer Deal Percentage EV / EV / Target Name Target Country Acquirer Name P/E Date Country Value Acquired EBITDA Revenue

12-Apr-11 Sammok Kang Up Korea Youngheung Iron & Steel Korea $25.0 100% - 0.6x -

16-Dec-10 Hero Honda Motors India Hero Investments India $843.0 26% 5.8x 0.9x 18.0x

19-Aug-10 Siam Pan Group PCL Thailand Investor Group Thailand $10.8 69% 0.4x 0.1x 3.9x

29-Jul-10 MITSUBA-WALBRO INC Japan TI Automotive Holdings Ltd UK $8.6 50% - 0.4x 25.0x

19-Jun-10 Hubei Axle Co China Investor Group China $7.5 28.5% - 0.4x 399.4x

6-Apr-10 Automotive Stamping Tech Korea JetTech Ltd Korea $8.0 51% - 0.7x 12.3x

1-Apr-10 Interhides PCL Thailand Ongart Thumrongsakunvong Thailand $7.1 20% 3.7x 0.9x 4.7x

8-Feb-10 Cuzco LBE Co Korea A-motion Co Korea $34.3 24% 12.4x 1.0x 20.3x

1-Feb-10 Hwa Fong Rubber(Thailand)PCL Thailand Mega Intl Coml Bank Co Taiwan $13.4 32% 4.3x 0.7x 12.1x

1-Feb-10 MAT Co Korea Sejin Electron Inc Korea $13.7 33% - 0.2x -

9-Dec-09 Suzuki Motor Corp Japan Volkswagen AG Germany $2,527 20% 6.2x 0.4x 39x

14-Oct-09 Hyundai Corp Korea Hyundai Heavy Inds Co Korea $201.9 50% 12.1x 0.2x 44.9x

12-Oct-09 Dual Industrial Co Korea IHC Co Korea $6.4 35.6% - 0.5x - Median $13.4 32.6% 5.8x 0.5x 19.2x

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NEW YORK LONDON Business Development Asia is an Euan Rellie, [email protected] Andrew Huntley, [email protected] investment banking firm which Charles Maynard, [email protected] Business Development Asia Ltd assists multinational companies in Business Development Asia LLC 33 Cavendish Square expanding their businesses in Asia 1270 Avenue of the Americas, Suite 2310 London W1G oPW, United Kingdom through acquisitions, divestments, New York, NY 10020, USA T (44) 20-7182-4518 T (212) 265-5300 F (44) 20-7182-4100 JVs, and capital raising. For further F (212) 265-4300 information on BDA’s services or on SHANGHAI HONG KONG any of the articles in this newsletter, Jeffrey Wang, [email protected] Paul DiGiacomo, [email protected] please contact the offices listed. Business Development Asia Co Ltd Business Development Asia (HK) The Center, #1602, 989 Changle Road Suite 905, ICBC Tower Shanghai, 200031, China 3 Garden Road, Hong Kong T (86) 21-5407-5580 T (852) 2537-9565 F (86) 21-5407-5680 F (852) 2537-4406

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