TU-TESL

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On October 30, the third quarter report issued by FAW sedan Co., Ltd. (000800) showed that the company achieved revenue of 17.292 billion yuan in the first three quarters, a year-on-year decrease of 6.95%; net profit loss of 267 million yuan, a year-on-year profit of 135 million yuan, a year-on-year decrease of 297.33%. The net profit attributable to the shareholders of the listed company after deducting the non recurring profit and loss is - 370 million yuan. In the third quarter (July September 2019), the operating revenue was 6.59 billion yuan, a year-on-year increase of 20.09%; the net profit loss was 276 million yuan, a year-on-year decrease of 609.65%. The net profit attributable to the shareholders of the listed company after deducting the non recurring profit and loss is RMB 275 million. It is worth noting that FAW still had a net profit of 96 million yuan in the first half of this year, and it turned into a loss in the third quarter. As for the performance loss in the first three quarters, FAW car official explained in the report that this is because the sales volume of domestic passenger car market fell from January to September 2019, the sales volume of the company's whole vehicle decreased, and the company's operating revenue, gross profit rate and other indicators decreased year-on-year due to factors such as the switch between the fifth and sixth countries, the price rise of precious metal market and the fluctuation of yen exchange rate, In addition, the investment income recognized by the joint-stock enterprises is reduced, resulting in a significant reduction of performance in the reporting period. In addition, FAW also raised the issue of asset restructuring in the third quarter report. At the end of August this year, FAW sedan disclosed the draft of asset restructuring, and planned to take its assets and liabilities other than FAW finance, Xin'an insurance and some retained assets as assets (undertaken by the newly established subsidiary FAW Pentium sedan Co., Ltd.), and replace the equivalent part of 100% equity of FAW liberation held by FAW shares. Among them, the 100% equity of FAW Pentium car is priced at 5.088 billion yuan, and the 100% equity of FAW liberation is priced at 27.009 billion yuan. According to the announcement issued by FAW on September 27, the above major asset restructuring matters have been approved by the state owned assets supervision and Administration Commission of the State Council, and the overall plan of the company's asset restructuring and supporting financing has been agreed in principle. However, the reorganization plan shall be submitted to the general meeting of shareholders of the company for deliberation and approval, and shall not be implemented until it is reviewed by China Securities Regulatory Commission. It is commented in the industry that after the reorganization, FAW Pentium and its assets will be transferred to FAW, and FAW liberation will be included in FAW sedan, so the main business of FAW sedan will be changed to the development, manufacturing and sales of commercial vehicles, and FAW will focus on passenger vehicle business, which will be conducive to resolving FAW and related joint ventures and FAW sedan for a long time To solve the problem of horizontal competition. Previously, FAW owned Hongqi, FAW Jilin and other passenger vehicle brands, while FAW Xiali, another listed company of FAW, owned Xiali passenger vehicle brand, both of which competed with FAW in the same industry, and it has been 8 years since FAW said it would solve this problem in 2011. At present, FAW sedan has 6 joint-stock companies, among which FAW sedan sales Co., Ltd. and FAW Mazda Automobile Sales Co., Ltd. are mainly involved in passenger vehicle sales. Among them, FAW Car Sales Co., Ltd. holds 56% of the shares, mainly engaged in the sales of independent brand series of complete vehicles. FAW Mazda Automobile Sales Co., Ltd. has 90% of the shares, mainly engaged in joint venture Mazda brand models including Mazda6 ATZ and cx-4. However, the contribution of independent and joint-venture brands to FAW's performance is quite different. During the reporting period, FAW Mazda Automobile Sales Co., Ltd. made a net profit of 94.6528 million yuan, while FAW sedan sales Co., Ltd. made a net profit of - 155 million yuan. It can be seen that FAW's passenger car business is still a joint venture brand. But it is worth mentioning that the sales growth of Pentium and Mazda is in contrast. According to the sales data released by FAW Pentium, from January to October this year, the cumulative sales volume of FAW Pentium exceeded 90000, a year-on-year increase of 36%; while according to the sales data released by FAW Mazda, the cumulative sales volume of FAW Mazda from January to September this year was 63451, a year-on-year decrease of 24.78%. FAW car believes that after the completion of asset restructuring, the company will change from the main business of passenger vehicles to the main business of commercial vehicles, which will help to enhance the profitability of enterprises. However, in the countdown period of asset restructuring, how to boost the sales volume and profit level of FAW Pentium and FAW Mazda is still a big pressure for them.