FAW Xiali 2011 EPS 0.07 yuan. 63.5%), in line with market expectations. Affected by the slowdown in industry growth, the company sold 253000 cars (+ 1.07%) in 2011, which was weaker than the industry's average growth rate of 2.4%. It achieved operating income of 10 billion yuan (+ 0.6%) and net profit of 110 million yuan (- 63.5%), which was consistent with the range of performance forecasts and in line with market expectations. Last year's profit fell sharply, mainly due to the company's increased promotion efforts, resulting in a decline in profitability; at the same time, affected by the decline in FAW Toyota's profit (4.4 billion yuan, 4.4%), the investment income decreased by about 60 million yuan.
The company's EPS in the first quarter is 0.03 yuan (+ 6.6%), which is better than the market expectation. The company sold 58000 vehicles (- 29.5%) in the first quarter and achieved an operating income of 2.06 billion yuan (- 32.5%). Its profitability is still under great pressure, and its business loss is estimated to be about 330 million yuan (- 55.5%). However, thanks to the gradual recovery of FAW Toyota's profits and its low base last year, it contributed investment income of about 390 million yuan (+ 46%) in the first quarter, making the company's first-quarter net profit of 54.86 million yuan (+ 6.6%) and EPS 0.03 yuan, better than market expectations.
Toyota increases its investment in the Chinese market, and FAW Toyota's market position is expected to pick up gradually. Toyota's market share in China Poverty is less than / 70, which does not match its global market position of about 10%. Toyota has recently increased investment in the Chinese market, strengthened local decision-making, moved the China department, which has been established for many years, from Japan to Beijing, and has struggled to produce a new generation of Prius, all of which contribute to the gradual recovery of FAW Toyota's market position. FAW Toyota sold 138000 vehicles (+ 5.9%) in the first quarter, with an estimated profit of about 1.3 billion yuan (+ 46%). The full-year profit is expected to return to 4.6 billion yuan (+ 4.4%).
The overall listing of FAW Group is approaching, and if market expectations strengthen, the company is expected to get a valuation premium.
In the acquisition report of FAW, FAW promised to strive to thoroughly solve the problem of inter-industry competition between the company and FAW subordinate enterprises within 3 years after the completion of the acquisition. In April this year, the shares of FAW Xiali and FAW cars transferred by FAW Group to FAW have completed the registration procedures for equity transfer.
The overall listing of FAW Group is approaching, and if market expectations strengthen, the company is expected to get a valuation premium.
Risk factors: lower-than-expected macroeconomic growth led to a downturn in car demand; FAW-Toyota sales and profits were lower than expected; operating losses exceeded expectations; raw material prices and labor costs rose sharply.
Earnings forecast, valuation and investment rating: slightly adjust the profit forecast, the company's annual EPS in 2012-13-14 is 0.10max 0.18max 0.27 yuan (EPS is 0.07yuan in 2011, the original forecast is 2012 / 13 EPS is 0.11max 0.16). Considering the losses in our business and the huge profits of FAW Toyota, we think that segment valuation should be adopted for the company. Based on the neutral assumption, FAW Toyota is reasonably valued at 9-10 times PE in 2012, and the business valuation is zero, then the reasonable market capitalization of the company is about 13 billion yuan, and the value per share should be 8 yuan. if FAW's overall listing expectation is enhanced, the company is still expected to obtain a valuation premium and maintain the company's "overweight" rating.