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【天相投资】中国嘉陵:2季度扭亏为盈

[Tianxiang Investment] China's Jialing: Turning a loss into a profit in the second quarter

天相投資 ·  Aug 2, 2010 00:00  · Researches

From January to June 2010, the company achieved operating income of 1,863 million yuan, an increase of 4.29% over the previous year; operating profit of 10.43 million yuan, compared with the same period last year - 16,400 yuan; net profit attributable to owners of the parent company was 5.43 million yuan, an increase of 10.46% over the previous year; and EPS was 0.008 yuan. The company achieved operating income of 960 million yuan in the second quarter, an increase of 6.24% over the previous quarter; operating profit of 9.49 million yuan, an increase of 9.1 times over the previous quarter; net profit attributable to owners of the parent company was 8.86 million yuan, turning a loss into a profit compared to the first quarter; EPS was 0.013 yuan.

Comprehensive gross margin increased slightly, and investment income contributed greatly to net profit. The company's consolidated gross profit margin in the first half of the year was 13.35%, up 2.8 percentage points from the previous year. The gross margins of the main products, motorcycles and parts, optoelectronics and others (optoelectronic instruments, optical instruments) were 13.96% and 9.05% respectively, up 3.28 and 9.64 percentage points respectively; the net investment income was 13.47 million yuan, mainly due to the net profit of 51.1 million yuan of Jialing Honda Engine Co., Ltd., which participated 30% of the shares, and contributed 10.55 million yuan in investment income to the company, accounting for 194.3% of the net profit attributable to owners of the parent company.

Revenue growth in the export market is higher than the domestic market. In the first half of the year, the company achieved export revenue of 267 million yuan, accounting for 14.33% of operating income, an increase of 9.29% over the previous year, which was higher than the domestic market revenue growth rate of 7.69 percentage points. The main reason is that the company has increased its efforts to develop international markets, and sales in key markets such as Myanmar, the Philippines, and Brazil have achieved significant growth. In 2010, the company actively explored regional markets such as North Africa and West Africa, seeking room for sales to appreciate. We expect the export market revenue growth rate to exceed 10% in the second half of the year.

Results may decline in the second half of the year, and the relocation project will reach production in 2011. Starting July 1, National III Standard was implemented, and the company faced greater costs and marketing pressure. We expect a slight decline in operating income in the second half of 2010. The relocation project started by the company at the beginning of this year is expected to be completed by the end of 2011. At that time, the annual production capacity of motorcycles and engines will reach 850,000 units and 950,000 units respectively, with an output value of 5 billion yuan after production is put into operation. With the high-end development of motorcycle products and the strengthening of the company's cost control capabilities, it is expected that the company's comprehensive gross margin will increase to 12.6% and 13.2% respectively in 2011 and 2012, and the cost rate for the period will drop to 9.7% and 9.5% respectively, and net profit will increase by 64.87% and 65.93%, respectively.

Profit forecast and rating: The EPS for 2010-2012 is expected to be 0.02 yuan, 0.03 yuan, and 0.05 yuan respectively. Based on the closing price of 10.10 yuan on July 30, the corresponding dynamic PE is 505 times, 337 times, and 202 times, respectively. Maintain the company's “neutral” investment rating.

The translation is provided by third-party software.


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