Sinotruk, Jinan Truck dip on profit warnings | South China Morning Post
  • Sat
  • Feb 28, 2015
  • Updated: 2:55pm

Sinotruk, Jinan Truck dip on profit warnings

PUBLISHED : Saturday, 20 June, 2009, 12:00am
UPDATED : Saturday, 20 June, 2009, 12:00am

The Hong Kong-listed shares of Sinotruk (Hong Kong) and its Shenzhen-listed subsidiary, CNHTC Jinan Truck, dropped yesterday after both truck makers issued profit warnings.

Sinotruk fell 7.23 per cent to HK$6.67, while Jinan Truck dropped 4.4 per cent to 21.30 yuan (HK$24.07).

Yesterday, Jinan Truck, which is 63.78 per cent owned by Sinotruk, warned of a substantial drop in net profit of between 50 and 60 per cent to about 160 million yuan in the first half.

The global financial crisis has caused sales of heavy trucks to fall, shrinking profits owing to intensifying competition, Jinan Truck said.

The company sold 12,110 trucks last month, 7.3 per cent less than in April. Total truck sales for the first five months of this year fell 4.3 per cent year on year to 58,000 vehicles, according to a KGI Securities report by analysts Stephen Wang and Michelle Wei.

'Jinan Truck reported hefty first-quarter sales expenses of 204 million yuan, up 53 per cent year on year, due to sales policy adjustments and increased sales rebate, for a 5 per cent sales expense ratio, up markedly from 3 per cent in 2008. We are concerned the lofty expense ratio may weigh on the performance in the first half,' said the KGI report.

'Considering the current valuation and potential pressure on first-half results, we have downgraded Sinotruk to neutral from outperform. We still believe the firm is the leader in China's truck market and we think it will rebound most sharply among peers.'

On Thursday after the markets closed, Sinotruk issued a warning of 'a substantial reduction' in its net profit in the first half.

During the first half of last year, Sinotruk's net profit grew 39.9 per cent to 768 million yuan.

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