FAW Car Co., Ltd. Increases Output, Increases Revenue for Half a Year

It seems that the FAW sedan (000800) will not increase its output. The 2011 semi-annual report disclosed by FAW Car on the evening of last Thursday (August 25) showed that during the reporting period, the company realized total operating revenue of 19.08 billion yuan, an increase of 6.53% year-on-year; net profit of 804 million yuan, a year-on-year decrease of 39.87%; The gain is 0.4938 yuan.

The company stated that in the first half of the year, it had encountered unexpected changes in markets, resources, etc., as the country’s financial and monetary policies tightened, inflation increased, car incentives withdrew, oil prices rose, and Beijing’s purchases and other factors affected the domestic passenger car market. The growth rate has dropped sharply, and independent products have been hit hard; due to factors such as falling prices, rising costs, and increased depreciation, the company’s profitability in the first half of the year has declined.

During the reporting period, the company’s total vehicle sales exceeded 142,000 units, and its vehicle sales increased by 9.6% year-on-year, but the revenue was only increased by 6.5%. On the second day of the mid-year forecast release, FAW Car also thrown out a total of six projects with a total investment of 3.5 billion yuan. This move further intensified the industry and the agency Third quarter "loss" worries.

In a subsequent analysis, Wang Yuxi, an analyst at BOC International, pointed out that the decline in gross profit margin and the increase in administrative expenses are the main reasons for the company’s profit decline. Considering that the sales volume of the company dropped significantly in July-August, and the release of new production capacity may increase the depreciation and amortization, “combining the earnings warning of the company, we expect the company may lose money in the third quarter”.

FAW Car said in its investment announcement released on Friday (August 26) that the company will invest in an M platform that will annually produce 30,000 A130 hatchbacks, an annual output of 80,000 Chinese FAW D009 and an annual output of 30,000. The J31 project, as well as six major projects including the power center capacity expansion project and the construction of the quality assurance center, are expected to have a total investment of 3.5 billion yuan.

A few days ago, the Bank of China International lowered the earnings per share of FAW's sedan from 2011 to 2012 to RMB 0.68 and RMB 0.74. However, it maintained its target price and holding rating for the time being.