(Yicai Global) Nov. 23 -- Shares of Haoneng Technology surged after the Chinese automotive supplier for Germany's Volkswagen and Canada’s Magna International said it will build a factory in Sichuan province to make better shafts for new energy vehicles.

Haoneng's stock price [SHA:603809] closed up 3.5 percent at CNY12.38 (USD1.70) after jumping as much as 7.2 percent intraday.

The component maker penned an investment agreement with the administration of a development zone under the Luzhou government to establish a plant with an annual capacity of two million shafts, the Chengdu-based firm said in a statement yesterday. The land was already bought in May 2021 and the facility is expected to be ready by October 2024.

The hollow shafts made by the new plant will cut the weight of the motor and improve its performance, the firm said. Haoneng will deepen its cooperation with carmaker or parts maker clients BYD, Dana, and Geely Holding Group in terms of NEV parts amid the rapid development of the sector to create new profit growth points, it added.

Haoneng also released a CNY500 million (USD69.8 million) convertible bond financing plan yesterday to raise money to build another project for automotive parts.

Editor: Emmi Laine, Xiao Yi