FAW Toyota 3Q improvement is quite obvious, sales and profits increased significantly. Affected by the earthquake, 2Q FAW Toyota reduced production and sold only 52000 vehicles (month-on-month ratio-48%). 2Q Xiali investment income was only 150 million yuan. 3Q FAW Toyota resumed production to replenish inventory and adopted an active sales strategy. sales returned to 122000 vehicles in a single quarter (+ 134% compared with the previous quarter), and Xiali's investment income rose to 356 million yuan, the highest profit in a single quarter in recent years. According to the simple estimation of the investment income, the profit of FAW Toyota 1-3Q is 0.87,0.97 and 9700 yuan respectively. The increase of 2Q profit compared with 1Q bike can be understood as the selective production of 2Q products, while the 3Q bike profit has not declined. It can be understood that the scale effect offsets the impact of price reduction of some products. It is expected that with the commissioning of Toyota's new plant, product upgrading and new product launch, FAW Toyota will be more active in the market in 2012, and the growth will be very obvious in the future.

FAW Xiali 1-3Q sold 190000 vehicles, up 12% from the same period last year, better than most of its own brands. Although the profitability of Xiali Automobile is poor, for FAW Group, the annual sales of more than 250000 cars of its own brand is still not a small weight (132000 cars of its own brand in 2010). It still has certain significance to narrow the difference in sales scale between FAW Group, SAIC Group and Dongfeng Group. From the point of view of its bicycle sales price, 1-3Q is 3.47,4.18 and 41600 yuan respectively. Structurally, the proportion of Wei series has increased, and the price of 4Q bike is expected to be the same or decline slightly.

Investment advice and risk tips. Maintain the profit forecast of 0.09 yuan EPS for the whole year 2011. In the analysis report of "looking at Xiali by the change of valuation Model" in July, we roughly expounded the logic of recommending FAW Xiali, which we still adhere to, and believe that with the passage of time, the time cost of investment will become lower and lower. FAW's overall listing in 2012 is a high-probability event, similar to GFAW's acquisition of Changfeng in 2010, FAW Xiali has high game value. Continue to maintain the "highly recommended-A" investment rating unchanged.

The main risk lies in the specific timing and plan, there is still uncertainty.