SAIC Motor may report rosy H1

09:28, July 21, 2010      

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China's largest automaker, SAIC Motor Corp, may report it more than tripled its first-half net profit compared to the same period last year, helped by upgrades to its product structure and increased control over its tie-up with General Motors, said analysts.

A man walks through a vehicle lot at the SAIC-GM Wuling-Automobile Co factory in Liuzhou, Guangxi Zhuang autonomous region. Qilai Shen / Bloomberg

The Shanghai-based company said in a statement filed to Shanghai Stock Exchange on Tuesday that its first half net profit may grow by over 300 percent from a year earlier, without disclosing detailed earnings figures. That will compare to a net income of 1.45 billion yuan ($214 million) in the first six months of 2009.

According to the statement, the key reason for the profit jump is the company's brisk sales of 1.77 million vehicles during the period, up over 44 percent year-on-year in the world's biggest and fastest growing automobile market.

SAIC's shares closed on Tuesday at 14.36 yuan per share, a slight increase of 0.84 percent on the Shanghai bourse. The company will announce its half-year earnings results on Aug 26.

Analysts also attributed SAIC's net profit surge to the dominant control of Shanghai GM, its joint venture with General Motors, which is expected to contribute more than 30 billion yuan to SAIC's total first-half sales revenue.

SAIC paid about $85 million to get an additional 1 percent share from GM in February, boosting its total stake in Shanghai GM to 51 percent, and enabling it to consolidate the venture's accounts on its balance sheet.

Moreover, the strong net profit numbers come on the heels of the company's increasing market share in mid-priced and premium car segments, said Shao Wenzhong, analyst with Changjiang Securities.

"SAIC has been the best performing passenger car producer in the first half. As its upgraded product structure fits the market structure very well, SAIC's earnings are expected to continue the strong growth in the second half," said Shao.

Chen Hong, president of SAIC, said that mid-priced and premium cars, overseas markets and its self-developed brands will be the company's future growth engines.

SAIC Motor plans to launch 14 of self-branded models under the brand names Roewe and MG between 2011 and 2014.

Anhui-based Jianghuai Automotive Co said last week that its net profit in the first half may also have surged more than 300 percent from a year earlier to exceed 456 million yuan because of increased sales during the period and higher gross margins of its main products.

China's second-biggest automaker FAW Group's listed arm FAW Car said last week that it expects its profits in the first half to rise by 100 percent to 150 percent over last year, while FAW Xiali said its first-half net income may increase 420 percent to 470 percent.

Source:China Daily


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