Aircraft-related stocks jumped yesterday after a news report
said that China's two state-owned aircraft makers may merge to
integrate domestic resources.
Gu Huizhong, vice general manager of China Aviation Industry
Corp I, or AVIC I, said government departments, including the
Commission of Science, Technology and Industry for National
Defense, are drafting plans to merge AVIC I and AVIC II to boost
the domestic aviation industry, according to China Business
News.
The two companies, which focus on making military and civil
aircraft, may set up a joint venture to merge their units which
produce civil airliners, the Shanghai-based newspaper said.
"Listed companies controlled by the two companies will benefit
from the merger," said Xia Fulu, an analyst at Industrial
Securities. He said the merger is the first step to China
eventually building big planes. "The merged firm will eventually
build big planes."
An official of AVIC I said he was not aware of the merger
plan.
AVIC I already builds China's first regional jet ARJ21, which
will make its maiden flight next March. The project, costing six
billion yuan (US$821 million), is seen as a precursor to China
building its own jumbo jets.
Xi'an Aircraft International Co, partly controlled by AVIC I,
rose 6.15 percent to close at 38.84 yuan on the Shanghai Stock
Exchange and Jiangxi Changhe Automobile Co, partly owned by AVIC
II, gained 10 percent to 9.30 yuan.
(Shanghai Daily by Winny Wang January 3, 2008)