Wearnes' Chinese affiliate sells Porsche dealerships in surprise move

StarChase Motorsports, an affiliate of Singapore-based multi-franchise motor group Wearnes-StarChase, has completed the sale of its Porsche dealership business in China - a move that has taken some observers by surprise.

Hong Kong-listed Chinese motor conglomerate China MeiDong Auto paid 3.7 billion yuan (S$760 million) for the dealerships in several cities, including Nanjing, Qingdao, Tianjin and Zhengzhou.

The transaction, which took four month to complete, has raised some eyebrows.

"Porsche is doing extremely well in China. And there is no apparent threat of the manufacturer applying the agency model there," said a senior executive with a regional motor distributor, referring to an operating model where car manufacturers control retail sales, and relegate dealers to agents with fixed, thinner margins.

Another industry player said: "It's a very good price. And perhaps they (Wearnes-StarChase) wanted something with a better return on investment."

In an announcement to shareholders last month, China MeiDong said StarChase Motorsports posted 2021 revenue of 6.41 billion yuan, and net profit of 268.3 million yuan - more than double the 2019 net results.

China MeiDong reported revenue of 23.58 billion yuan in 2021, and profit of 1.21 billion yuan (up 57.4 per cent).

Two years ago, StarChase Motorsports also pared down its motor operations in Indonesia. Whether the recent deals have implications for the business in Singapore is unknown, although various sources at Wearnes do not think so.

The StarChase group is controlled by Malaysian tycoon Yaw Chee Ming, who also owns Malaysian timber empire Samling Group with his father Yaw Teck Seng. Samling did not respond to e-mail queries.

Meanwhile, China MeiDong said that with the acquisition, StarChase Motorsports has become a fully owned subsidiary.

In its announcement to shareholders, it said it has "commenced the adjustment and improvement of the existing business structure and mid-to-long-term business capabilities" of the subsidiary. It "believes that the target company will enhance the revenue stream of the group... group earnings are expected to increase as a result".

China MeiDong noted, however, that StarChase Motorsports had gearing ratios (debt to equity) of 184.5 per cent to 217.5 per cent between 2019 and 2021 - considered by many to be high.