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The company announced that in the first half of 2015, the company realized consolidated operating income of 906 million yuan, down 8.02% from the same period last year; the net profit attributed to shareholders of listed companies was 281 million yuan, down 42.92% from the same period last year, equivalent to 0.33 yuan per share; deducting 237 million non-net profit, equivalent to 0.28 yuan per share.
Ping an point of view: the company's lower-than-expected performance is mainly due to a sharp decline in profit margins in the automotive business. The company's annual 1H15 is EPS0.33 yuan, deducting non-EPS0.28 yuan, of which investment income contributes 0.49 yuan (of which automobile business contributes 0.33 yuan, Beijing-Shanghai highway 0.15 yuan), and table business (textiles, new materials, road tolls) contributes a loss of 0.16 yuan.
The loss of consolidation business expanded in the first half of 2015: the loss of consolidation business expanded to 137 million in the first half of 2015, of which the operating profit of manufacturing (textile and biodiesel) dropped to 9.24 million yuan from 10.85 million in the same period last year. The operating profit of road tolls (Shaanxi Copper and Xuzhou third Ring Road) dropped from 124 million last year to 99.76 million yuan in the first half of this year.
The net interest rate of the auto business fell sharply to 3.95%. In the first half of the year, Dongfeng Yueda Kia sold 303000 cars (- 2.6%), realized operating income of 28.45 billion yuan (- 4%), and completed 36.27% of the annual plan. The net profit was 1.12 billion yuan (- 42.6%), the net interest rate dropped to 3.95% of 1H15 from 6.6% in the same period last year, the average price of bicycles dropped from 95300 yuan in the same period last year to 93800 yuan in the first half of this year, and the net profit dropped from 6279 yuan in the same period last year to 3703 yuan in the first half of this year. Growth in the passenger car industry continued to decline in the first half of the year, with Korean car companies Hyundai and Kia performing weakly. Yueda Kia lacked heavyweight new SUV models and maintained sales by reducing profits and prices, resulting in a 43 per cent drop in net profit in the first half. In the second half of 2015, the auto joint venture company plans to launch a new K5 in October, and the company will launch a new version of the smart run in 2016.
Profit forecast and investment advice. We judge that the company's consolidated watch business (textile business, road tolls, biodiesel) losses continue, Dongfeng Yueda Kia decline will have to wait for the new SUV listing, as the automotive business has entered a period of adjustment, but the business has not improved, the company's overall performance is likely to remain in a significant decline. We downgrade the company's performance forecast to 0.63 yuan and 0.75 yuan (the original forecast is 2015 / 2016 EPS1.43/1.61 yuan), and downgrade the rating from "recommended" to "neutral".
Risk hint. The loss of the consolidated business continues to expand, and the automobile business continues to deteriorate.