Shanghai Automotive: Strong Performance Growth in the First Three Quarters; Industry to Continue High Growth Momentum
Shanghai Automotive Industry Corporation (Group) (hereinafter referred to as Shanghai Automotive) today released its third-quarter report for 2009. The report shows that Shanghai Automotive's performance significantly increased during the first three quarters of this year, with earnings per share reaching 0.607 yuan, a year-on-year increase of 78.52%. It achieved operating revenue of 99.6 billion yuan, up by 21.53% year-on-year, and net profit reached 3.97 billion yuan, also increasing by 78.52% year-on-year. If the impairment impact of Ssangyong is not considered, Shanghai Automotive realized a net profit of 5.152 billion yuan in the first three quarters, representing a year-on-year increase of 131.45%.
The report indicates that Shanghai Automotive's performance in the third quarter was notably better than in the second quarter. Vehicle sales exceeded 722,000 units in the third quarter, an increase of 6.1% compared to the previous quarter. Due to steady growth in sales volume and continuous improvement in product mix, the company realized a net profit of 2.528 billion yuan in the third quarter, which is a 44.87% increase from the net profit of 1.745 billion yuan in the second quarter before deducting the impairment provision for Ssangyong.
Shanghai Automotive's excellent performance mainly comes from two factors: firstly, the company has tightly seized the growth opportunities brought by national stimulus policies such as halving the purchase tax and rural market promotion. From January to September this year, it sold 1.948 million vehicles, an increase of 47.3% year-on-year, outpacing the industry average growth rate by 13.1 percentage points, maintaining its leading position in the industry; secondly, the company has promoted profitability growth through optimizing product structure, with sustained growth in mid-to-high-end model sales. Recently launched mid-to-high-end models such as the New Buick Regal, New Passat Lingyu, New Buick LaCrosse, and Superb have been well received in the market. Monthly sales of mid-to-high-end models increased from 20,000 units in January to 32,000 units in September. In the third quarter, sales of passenger cars above 1.6 liters accounted for 50.1% of total sales, increasing by 4.8 percentage points compared to the previous quarter. Additionally, Shanghai Automotive's strategy of "high starting point, differentiated development" for independent brands has started to bear fruit, and its quality culture centered on "user interests" has gained market recognition. The company's independent brand profits have grown significantly, breaking 65,000 units sold from January to September, up by 186% year-on-year, with whole vehicle manufacturing already achieving profitability.
According to industry forecasts, domestic automobile demand will continue to maintain high growth in the fourth quarter. It is expected that domestic automobile demand in 2009 could exceed 13.4 million units, with year-on-year growth exceeding 40%. Domestic whole vehicle sales have remained over one million units for seven consecutive months, especially under conditions where the initial stimulus policies have been in place for a long time and no new policies have been introduced recently. Whole vehicle sales still maintained at the one million unit level during the traditional off-season months of July and August, while setting a new record for monthly sales in the peak season month of September. Under the catalysis of stimulus policies, the intrinsic growth demand of China's automobile market has reached a new level, particularly as the passenger car market has shifted from "structural growth" to "comprehensive growth." Based on trend analysis, domestic automobile demand is expected to maintain growth of more than 10% in 2010.