Brief comment on performance

The company's operating income from January to September in 12 years was 6287 million yuan, down 33.50% from the same period last year; the net profit belonging to shareholders of listed companies was 349 million yuan, down 34.91% from the same period last year, and the EPS was 0.44 yuan.

Business analysis

The market share of loaders has declined: in the first three quarters of 12 years, the demand for construction machinery products in China generally declined. According to the statistics of the industry association, the company sold 17700 loaders, down 43.15% from the same period last year, with a market share of 12.82%, down 3.4% from 11 years, while the company sold 2800 excavators, down 24.03% from the same period last year. Market share increased by 0.6 percentage points to 2.9% over 11 years.

The decline in revenue slowed down in the third quarter: from July to September, the company achieved 1959 million yuan in operating income, down 15.67% from the same period last year, which was significantly smaller than-40.58% in the second quarter, but this was mainly due to the decline in the revenue base in the third quarter of 11, not because of improved product demand.

The gross profit margin fell sharply: in the first three quarters, the company's comprehensive gross profit margin was 12.70%, down 3.9 percentage points from the same period in 11 years, of which the gross profit margin in the third quarter was only 7.77%, down 5.6 percentage points from the same period in 11 years. At the same time, it also fell 6.5 percentage points from the end of the second quarter, a record low. The main reason for the decline in gross profit margin is the marked decline in economies of scale after a sharp decline in sales.

During the period, the expense rate increased, and the increase in financial expenses accelerated: from January to September, the company's period expenses were 762 million yuan, a decrease of 16.93% over the same period last year, but due to a faster decline in revenue, the period expense rate increased by 2.4 percentage points to 12.12% compared with 11 years. Among them, due to the decrease in product sales, the company's sales expenses decreased by 41.85% compared with the same period last year to 360 million yuan. However, in June, the company issued 1.5 billion yuan of corporate bonds with a coupon of 4.55%, resulting in a year-on-year increase of nearly 100% to 179 million yuan. As the company repaid 400 million yuan in long-term loans at the same time, financial expenses are expected to remain stable in the future.

The net profit mainly comes from investment income: in the first three quarters, the company's investment income reached 389 million yuan, accounting for 94.67% of the total profit, which is mainly due to the income brought by the company's reduction of its holdings in Societe Generale Securities. As the company has basically reduced its holdings of Societe Generale securities, the future investment income will be greatly reduced, which will have a negative impact on the 13-year performance.

Operating cash flow urgently needs to be improved: the company's operating cash flow in the first three quarters was-1026 million yuan, lower than-983 million yuan in the same period of 11 years, of which the operating cash flow in the third quarter was still a net outflow of 217 million yuan, mainly because the company's accounts receivable remained high, reaching 5276 million yuan at the end of the period, an increase of 379 million yuan compared with the end of the second quarter. At the end of the period, the monetary fund of the company is only 503 million yuan, so there is an urgent need to increase the efforts to pay back the money and improve the operating cash flow.

Profit forecast and investment suggestion

Due to the sluggish recovery in industry demand, the company's gross profit margin fell more than expected. We lowered the company's profit forecast. We forecast operating income of 8356 yuan, 9306 yuan and 10851 million yuan respectively, and net profit of 352,145 and 219 million yuan respectively from 2012 to 2014. Year-on-year growth of-38.53% Kui 58.83% and 50.75% China EPS were 0.441, 0.182 and 0.274 yuan, respectively, 20%, 20% and 10% lower than the original forecast.

The company's current share price corresponds to 14.33 times PE in 2012, considering that the company's 13-year performance will still decline sharply due to the decline in investment income, maintaining a "neutral" rating.

Risk hint

The company is conducting a public offering, which will ease the company's financial pressure, reduce financial costs and improve performance after a successful offering.