SINOMACH (600335) Interim Review: H1 Revenue Increases 11%, Industrial Chain Extends Further

SINOMACH (600335) Interim Review: H1 Revenue Increases 11%, Industrial Chain Extends Further

Event: The company 杭州桑拿网 released its 19-year interim report and achieved operating income of 267.

0 billion (+11.

11%), net profit 4.

0 billion (-7.

41%), lower than previously expected.

It is expected that the eps in 19-21 will be 0.



48 yuan, corresponding to 16Xpe in 19 years, maintain the company’s “prudent recommendation-A” rating.

  Comments: 1. Benefiting from the low base in the same period last year and the implementation of “National Sixth”, the company’s revenue in the first half of the year increased in the first half of 2019. The sales volume of the Chinese automobile market continued to decrease, but the imported automobile market grew against supply and demand.

On the supply side, the Customs gradually imported 530,000 vehicles (+17.

2%), sales of imported cars in the first half of the demand side40.

70,000 vehicles (+3.


One of them imported 18.

0%, the second quarter imports increased 73.


The rapid growth of imports in the second quarter was due to the reduction in tariff expectations for the same period in 2018, and manufacturers’ imports fell sharply by 45.

The low base of 1%, and the centralized declaration of parallel imports of cars before the implementation of “National VI.”

  The company’s operating income increased while its net profit decreased.

2019H1 gross profit margin, sales expense ratio, management expense ratio and financial expense ratio are 7 respectively.

43%, 1.

35%, 1.

68%, 0.

56%, the indicators for the same period last year were 8.

96% 1.

63% 2.

12% 0.

93%, which can eliminate the possible erosion of net profit by operating costs and three expenses.

The decrease in net profit was due to higher operating cost growth (+ 13%) than operating income (+ 11%), and 2019H1 accrued 55.37 million assets impairment losses (including bad debt losses 1 more than the same period last year).

07 billion).

  2. Restructuring. The synergy effect of the restructuring of China Automotive Engineering Industry to complete the further extension of the future industrial chain can be expected in April 2019. The company completed the issuance of shares to purchase assets and the replacement of ownership of China Automotive Engineering. China Automotive Engineering became a wholly-owned subsidiary of SINOMACH.

After nearly 60 years of development, the market share of China Automotive Engineering Corporation ranks first in the country. The main customers served are Mercedes-Benz, BMW, Volvo, Volkswagen and other top international car manufacturers.

After the transformation is completed, SINOMACH will further expand the field of automobile factory and production line construction on the basis of imported car trade, car leasing and financial business, and auto vehicle and parts export business.Synergy.

  3. In terms of imported automobile trade services, we have been steadily cooperating with the original manufacturers and actively developing new projects. In the first half of 2019, the company successfully renewed the 2019-2022 import mass wholesale trade agreement, and once again won the bid for Porsche Tianjin 2019-2022 comprehensive logistics service project.Deepen cooperation with 30 new brands such as SAIC-Volkswagen, FAW-Volkswagen, GAC Trumpchi, SAIC MG, FAW Pentium, and new search platforms such as Dasou Car, and build an integrated supply chain service system for OEMs and new retail platforms.It is expected that the scale of future revenue will be maintained.

  4. In terms of automobile export business, vehicle exports have increased, and overseas KD platforms have been actively built. In the first half of 2019, the company exported more than 2,000 complete vehicles to more than 10 countries including Arab, Italy, Russia, Costa Rica, Azerbaijan, and the Philippines, compared with last year.Growth over the same period.

In the early stage, it has obtained vehicle export authorizations from more than 10 domestic automobile OEMs. GAC Trumpchi and Chery have achieved export and actively expanded brands such as JAC and Foton.

At the same time, it won bids for electric buses exported to more than 30 countries by the United Nations, and developed auto parts exports to South America.  The company actively explores the construction of overseas public KD (Knocked Down, component assembly) platforms. It has cooperated with OEMs to go to Tunisia and Uzbekistan to conduct market surveys. It has also participated in local bus coaching and bidding projects with subsidiaries of SINOMACH.

The company identified the African market as an important target market for the KD platform, and actively expanded the construction of overseas vehicle KD platforms. It is expected that the growth of vehicle exports and auto parts will be released in the future.


In terms of financial leasing business, there are multiple main-line layouts and innovative financing methods to improve efficiency. In the first half of 2019, the financial leasing segment created nearly 60 million operating profits, accounting for 10 of the company’s operating profit for the current period.


Today, the company’s business layout has expanded to six main lines of online car rental, new energy city distribution, new energy passenger vehicles, traditional second-hand vehicles, traditional new vehicles, and traditional logistics 都市体验网 vehicles, forming “easy purchase”, “rental purchase” and “kurong”Bao” three major financial products.

At the same time that the financial leasing business is developing well, in order to revitalize the existing assets, the company issued the first phase of the asset-backed special plan, which is the first single AES financial financing leasing ABS for the Shanghai Stock Exchange, with a total issue size of 4.

580,000 yuan, the average annual cost of funds3.

81% will help the company achieve a virtuous circle of “project investment-independent financing-reinvestment”.

Risk reminder: Sino-U.S. Trade war affects imports more than expected, “tax cuts and fees cuts” less than expected on the automotive market