On June 3^rd, Guangxi Liugong Machinery Co., Ltd. (referred to LiuGong stock hereafter) passed the proposal on acquiring all the stock rights of Shanghai Liugong Forklift Co., Ltd. to conduct affiliated transaction.

It was announced that the Board of Directors agreed to acquire all the stock rights of Shanghai Liugong Forklift Co., Ltd. belonging to controlling shareholder Guangxi LiuGong Group and Liuzhou Liugong Machinery Accessories Manufacturing Co., Ltd. at the price of RMB 15.42 million Yuan, among which 70% of the stock rights is held by Guangxi LiuGong Group and 30% by Liuzhou Liugong Machinery Accessories Manufacturing Co., Ltd.  

The Chairman of the Board in LiuGong Group Wang Xiaohua explained that this is a strategic adjustment of the Group playing the role of an incubator to transfer Shanghai Liugong Forklift Co., Ltd. in charge of the listed company—LiuGong Stock to manage the production and distribution business, while LiuGong Group will be mainly engaged in capital operation and management. This is for preventing the competition in the same business for LiuGong Stock has already owned forklift business.

The Head of Strategy Development Department in LiuGong Group Wang Taiping further elaborated that incubating function means the Group will transfer some newly-built industries with market prospect to its stock corporation after developing into advantageous industries. LiuGong Group transferred the manufacturing and marketing business to LiuGong Stock so as to realize internal integration.

On the way of regional expansion and product line expansion, both the Group and LiuGong Stock have been fighting shoulder to shoulder; and then, after expanding to certain stage, they began to make clear respective business and work divisions.

Shanghai Liugong Forklift Co., Ltd., the former Shanghai Huguang Forklift Plant was founded in 1958. As the earliest enterprise specialized in manufacturing machineries, hydraulic IC and battery forklifts in China, and its production capacity has reached 3000 sets annually.

In 2007, LiuGong invested RMB 100 million Yuan to construct a forklift manufacturing base in Liuzhou names as Liugong Forklift Co., Ltd., mainly engaged in designing, manufacturing and selling forklifts, construction machinery and parts. The company plans to realize a 10,000 sets annual production capacity till 2009. 
 

Wang Taiping expressed that the construction of the two forklift manufacturing bases in Shanghai and Liuzhou was for the consideration of accomplishing smooth logistics distribution in Southern and Northern regions. In addition, the demands of forklifts in international market are extremely large, which can be widely used in loading/unloading and logistics industries.

Presently, the annual demands of forklifts all over the world are about 1 million sets, in which China demands for nearly 130,000 sets with market value of RMB 10 billion Yuan while the other demand of 900,000 sets is from international market.

Moreover, Wang Taiping added that in the future, the forklift business will become the stress of LiuGong’s internationalization strategy and the new increasing point of product business after acquiring Shanghai Liugong Forklift Co., Ltd. to eliminate competitions in the same business.

Among the sixteen categories of construction machinery industry, LiuGong has covered seven of them, including loaders, excavators, road rollers, land leveling machine, skid steer loader, spreading machine and small construction machinery.

LiuGong 2007 Annual Report indicated that the income of the main operation in LiuGong was RMB 7.59257 billion Yuan with a year-on-year increase of 38.98%; total profit value of RMB 664.91 million Yuan with a year-on-year increase of 33.6%. The company sold 30,575 sets of units in 2007, among which the sales of loaders surpassed 27,000 sets with sales income of RMB 5.58 billion Yuan, ranking to be No.1 in the industry.

About LiuGong

Founded in 1958, Guangxi Liugong Machinery Co., Ltd (LiuGong) is China’s leading construction equipment manufacturer and the first stock-listed company in domestic industry. Employing more than 6000 people and with 2006 revenues of 5.18 billion RMB, including 67.3 million USD from exports, LiuGong is the world’s second largest wheel loader manufacturer for annually outputting more than 20,000 units.