Click to see more exciting information Slightly lower than expected first quarter results, mainly due to the decline in gross margin. Company for 10 years a quarter of revenue and net profit of 889 million yuan and 0.58 billion yuan, up 23% and -23%, to achieve EPS 0.10, basically in line with our revenue growth forecast, net profit is slightly lower than forecast, mainly from copper and aluminum and other raw materials and Energy Prices, etc. (1,2 month suspension due to industrial use of gas fuel) caused significant increase in costs brought about gross margin declined (from 19% in 2009 to the current 15%).
Downstream Motorcycle Industries in which speed up the recovery, production and marketing rate to maintain a high level, three-wheeled motorcycle Sell Growth even more impressive, the annual demand for high-growth can be expected. The first quarter, the industry accumulated motorcycle sales 6,510,600 and 6,557,000, an increase of 14.99%, and 16.06%, of which: two motorcycle sales 6.0516 million and 6.0949 million, up 14.42%, and 15.22%; 3 wheel motorcycle sales 459,000 and 462,100, an increase of 23.14% and 28.48%. In the first quarter, the industry was 100.71% motorcycle sales, maintain a high level of motorcycle production and sales chain in March and showed significant growth year on year, as of the end of trade inventories 3 614 000, down 14.86%.
April onwards all products price increase of 3% -5% of the year is expected about 18% of the consolidated gross profit margin can be maintained in 2010, three engines and the machine will become a major growth performance. Given the current rise in raw material and energy prices, the company began in April have all the products price increase of 3% -5%, with the restoration of local natural gas energy supply, we expect 18% -20% in 2010 consolidated gross profit margin can be maintained.
2010, the company net profit growth will come from three motorcycle engines and general machinery products, expects tricycle engine will maintain about 30% of future growth in the machine business into rapid growth, the next three years by Speed up to 40%, a significant growth performance, and is expected to maintain high gross margins.
Reorganization and integration of the motorcycle industry is imperative, Zongshen Group is expected to first try first, to lay a good foundation for the development of listed companies in 2010, the introduction of strategic investors as well as hybrid and pure electric power projects and other new energy expansion worth the wait. Zongshen Chongqing Group will be restructured private motorcycle enterprise integration to achieve R & D, marketing resources, the strategic Cooperation Important platform, in July the country will be strictly implemented in three standard motorcycle industry consolidation will be the catalyst for accelerating; the introduction of strategic investors will help the company enhance the ability to integrate resources, and actively develop hybrid and pure electric power, bigger and stronger sustainable development.
Maintain the profit forecast, to maintain “overweight” rating. Although the company’s first quarter results slightly below expectations, but the second quarter of the product price increase will bring profitability to rebound in mergers and acquisitions throughout the year without regard to the potential extension-type growth, we temporarily maintain the 0.89 yuan and 2010-2011 1.15 yuan of profit forecasts (diluted ago), corresponding to 22/17 times the current stock price PE, a clear view of the company’s fuel power – hybrid – electric power development strategy and cultivate the new energy dynamic shape, well-made brands and status in the industry, taking into account the motorcycle industry consolidation in recent years the trend of the times, to maintain “overweight” rating.
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