Shares in China Automotive gained as much as 13% on Wednesday on news it acquired a 40% stake in Swedish automotive tech company Sentient AB and is entering the autonomous driving market.
The acquisition was made by China Automotive’s subsidiary, Hubei Henglong Automotive Systems Group Co. Ltd. The deal will be funded by three tranches of cash payments worth 20 million euros ($24.36 million), according to a statement posted by China Automotive today.
Further, "As a key focus of our recently formulated new five-year plan, we will leverage our advantage as a trusted steering solution provider to increase penetration into the fast-growing autonomous driving market,” Hanlin Chen, the chairman of China Automotive, said.
“We will continue to expand our global footprint, develop new technologies, win more contracts and create long-term shareholder's value. This acquisition is another step in our development to become a household global auto brand."
In addition to autonomous driving, Sentient AB specializes in software development and hardware design for advanced steering abilities, as well as vehicle motion control. According to the company, Sentient AB’s motion control technology has been tested on electric power steering and self-driving vehicles.
The announcement today comes as China’s auto market has witnessed a strong recovery from the coronavirus pandemic. In the first three months of the year, auto sales in the nation jumped 76% year-over-year to 6.48 million units, according to data from the China Association of Automobile Manufacturers.
As a result, China Automotive came away with a strong first-quarter earnings report, beating top and bottom-line estimates provided by Zacks Equity Research.
Thanks to the strong recovery from the pandemic, China Automotive raised its full-year 2021 revenue guidance to $485 million. Previously, China Automotive expected to generate $470 million in revenue.
Shares in China Automotive are down 15% year-to-date.