Lentuo International (NYSE:LAS), a China based automobile retailer is expected to price its IPO at $8 per share, the low end of its expected range of $8-$10 per share.
Business Overview (from prospectus)
We are the largest non-state-owned automobile retailer in Beijing, China as measured by new vehicle sales revenues in 2009. We operate six franchise dealerships, ten automobile showrooms, one automobile repair shop and one car leasing company in the Beijing metropolitan area, which is the largest automobile market among all cities in China in terms of annual new passenger vehicle registrations, according to the CADA. Three of our six dealerships are also among the leading dealerships in China for their respective brands as measured by individual dealership new vehicle sales volume. We provide a "one-stop shop" experience for our customers by offering them a wide range of automobile products and services in each of our franchise dealerships, or 4S dealerships, as they are commonly known in China. "4S" stands for sales, spare parts, services and survey, and is understood to mean that our dealerships offer a full range of automobile retail services. We offer new passenger vehicles, auto parts and accessories for sale, as well as automobile repair and maintenance services, and provide a channel for vehicle manufacturers to gather customer feedback. We also offer our customers assistance with procuring automobile insurance and financing and other automobile-related services.
Offering: 7.5 million ADS at $12-$14 per ADS. Net proceeds of approximately $58.0 million will be used for business expansion and approximately $8.0 million for enhancing higher margin products.
Lead Underwriters: Cowen & Company (NASDAQ:COWN), HSBC Corporation (HBC)
Revenues increased by 21.0%, or RMB227.8 million ($33.6 million), to RMB1,312.8 million ($193.6 million) in the six months ended June 30, 2010 from RMB1,085.0 million in the six months ended June 30, 2009...Gross margin increased to 11.9% in the first six months of 2010 from 10.0% in the same period of 2009...Operating expenses increased to RMB37.8 million ($5.6 million) in the six months ended June 30, 2010 from RMB28.7 million in the six months ended June 30, 2009...Selling, marketing and distribution expenses increased to RMB21.2 million ($3.1 million) in the six months ended June 30, 2010 from RMB16.3 million in the six months ended June 30, 2009...Net income increased by 35.0%, or RMB17.5 million ($2.6 million), to RMB67.4 million ($10.0 million) in the six months ended June 30, 2010 from RMB50.0 million in the six months ended June 30, 2009...Net margin increased to 5.1% in the first six months of 2009 from 4.6% in the same period of 2009...
The automobile retail industry is highly competitive. In a large metropolitan area such as Beijing, where we operate all of our existing businesses, consumers have a number of choices in deciding where to purchase a new or used vehicle and where to have such a vehicle serviced. According to the CADA, as of December 31, 2009, there were over 600 franchise automobile dealerships in operation in the Beijing metropolitan area and over 13,000 franchise dealerships in operation in all of China.