Huazhong's mid-term profit growth has been steadily increasing, grasping industry opportunities and making steady progress

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Huazhong's mid-term profit growth has been steadily increasing, grasping industry opportunities and making steady progress

(August 31, 2017, Hong Kong) Huazhong Vehicle Holdings Co., Ltd. ('Huazhong Vehicle' or 'The Company'; Share Code: 6830.HK) is pleased to announce the company and its subsidiaries ('Group') as of 2020 Operating results for the six months ended June 30, 2017 (the 'period').

During the period, the Group recorded a revenue of RMB 830,695,000 (the same below), an increase of 3.0% over the same period of last year; gross profit margin was 28.2%, a slight increase of 1.5 percentage points from 26.7% in the same period last year; attributable to owners of the parent company Profits increased significantly by 52.8% to RMB 53,058,000; basic earnings per share were 2.99 points, a significant increase of 51.78% from 1.97 points in the same period last year. At the same time, the board of directors decided to declare a dividend of 0.3536 HK cents per share during the period, in return for the support of the shareholders.

In 2017, the automobile sales market flourished. With the good growth of the industry, the Group continued to develop new customers, continued to implement strict cost control measures, and benefited from the increase in profits of associates, and the profitability was greatly improved. The Group's continuous automation investment and management improvement achieved excellent results. After the German mold company turned losses into profit last year, Changchun joint venture factory Huazhong Yanfeng Pio launched cost control and efficiency improvement after introducing the new strategic partner Yanfeng Pio. Quality management and other aspects have been significantly improved, turning losses in the first half of this year, which is good for the company's financial performance. The management expects that the net profit level of the joint venture company will be greatly improved in 2018-2019.

Thanks to the expansion of new markets and the addition of new customers, the Group's segment revenues also maintained steady growth. The total revenue of internal and external structural and decorative parts of the car was 629,464,000 yuan, accounting for 75.8% of the total revenue, thanks to the Group's strict Cost control, gross profit margin increased to 31.9% from 30.3% in the same period last year. The Group's own mold design and manufacturing capabilities, mold and tool revenue was 44,620,000 yuan, accounting for 5.4% of total revenue, up 0.5 percentage points over the same period last year, gross margin increased by 1.5% to 17.5%.

The automotive industry continued to grow steadily in the first half of 2017. The top 10 automakers sold approximately 11,800,000 units, accounting for 88.5% of China's total vehicle sales. Six of them, SAIC Group FAW-Volkswagen, Changan Automobile, Beiqi Automobile, Guangzhou Automobile Group and Chery have established stable business relationships with Huazhong Vehicles, providing a strong foothold for the Group's future development. As a long-term stable first-class supplier of well-known automobile brands at home and abroad, Huazhong Vehicle is committed to strengthening the Group's manufacturing capabilities and deepening its business relationship with OEMs. It has invested in the construction of new factories in Tianjin and Qingdao, serving FAW Volkswagen and other long-term businesses. Customers, in order to achieve a deep embrace of the customer base and further release of production capacity, are expected to start production in early 2018. In addition, the Group's Sino-German joint venture Hualuote will be officially put into operation in October this year, becoming the first domestic manufacturer of domestically produced sunshade. Waldorf specializes in the production of high-end interior fabrics for automobiles. It has the world's most advanced fine-grained, compounded processes and equipment, and continues to provide products and services to FAW Volkswagen, Ford, General Motors, Geely Automobile, BYD and other Chinese car manufacturers. Curtains, car roof trim fabrics, upright fabrics, etc.

Automobile lightweighting is the development direction of the current automotive industry, and the automotive industry is expected to usher in the era of lightweighting. Engineering plastics is one of the important lightweight materials. With the continuous advancement of technology and the expanding application range, it has gradually been recognized by more auto manufacturers, and the market space has great potential. The Group grasped the situation, focused on the light weight of automobiles, promoted the strategy of “reforming steel by plastics”, increased investment in research and development and production of lightweight materials, and established the advantage of moat for long-term development of enterprises. In terms of the layout of customers in the field of new energy vehicles, the Group has achieved results. At present, Huazhong has carried out comprehensive strategic cooperation with new energy vehicles such as Weimar and Singular, providing services for design, development and production of multiple parts for its new vehicles listed in 2018. In addition, the Group's Rio Tinto brand and diversified customer base are expected to increase order revenue in the future. Huazhong will make steady progress and strive to become China's leading auto parts supplier and return the long-term support of shareholders with greater value.

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