EastBridge Investment Group Inc. (OTCBB: EBIG), a leading provider of diversified financial services designed to help emerging public companies list on U.S. exchanges, with clients similar to companies like China Automotive Systems Inc. (Nasdaq: CAAS) and Sorl Auto Parts Inc. (Nasdaq: SORL), could benefit from one of its clients’ exposure to China’s burgeoning automotive industry.
EastBridge Investment Group Inc. (OTCBB: EBIG), a leading provider of diversified financial services designed to help emerging public companies list on U.S. exchanges, could benefit from one of its clients’ exposure to China’s burgeoning automotive industry. As the largest automotive dealership in China’s southeast Delta region, Golden Eagle could see significant upside when listed on a U.S. exchange.
China Becomes the Largest Automotive Market in the World
The world automotive industry’s future doesn’t look too bright. Demand in the United States is only expected to rise marginally, while sales in Europe and Japan are expected to dip lower. However, China’s insatiable demand for cars and trucks will propel it to become the largest automotive market in the world, according to a recent article published in The Economist.
Source: The Economist – December 27, 2010
Overall, automobile production in China is expected to reach 16 million units by 2012, hitting a CAGR of around 17% between 2009 and 2012, according to RNCOS. Meanwhile, the country’s automotive aftermarket is also expected to rapidly grow. Analysts at Freedonia Group project that the industry will grow 18.3% annually through 2014, driven by its expanding and aging stock of light vehicles.
Golden Eagle is Poised to Capitalize on the Growth
Golden Eagle Auto Sales Company is one of the largest dealers for LiFan Automobiles in China. With a historical growth rate of more than 35% per year since its mass production seven years ago, the company is well-positioned to capitalize on China’s growing automotive industry. The company also provides aftermarket accessories to LiFan for distribution to other dealers in China.
In April of 2011, the company signed an agreement with EastBridge to ultimately list on a U.S. exchange. EastBridge will provide consulting services to prepare it for an SEC audit, help it obtain U.S. SEC approvals, and provide public relations and capital raising functions as well. With the additional capital raised through a public offering, Golden Eagle could see significantly higher growth rates ahead.
While few details of the agreement have not yet been released, EastBridge has traditionally received a combination of cash and equity for assisting clients in the IPO process. Once the clients successfully go public, EastBridge has then offered its own shareholders equity in the client through a share dividend, while keeping a significant stake of its own to build up its balance sheet.
In the end, investors may want to take a closer look at EastBridge Investment Group (OTCBB: EBIG) given its stake in Golden Eagle – a premier play on China’s rapidly growing automotive industry. Combined with its other plays in the country’s education, entertainment and energy industries, investors could realize significant upside potential over the long-term.
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