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Shanghai Automotive Co Ltd yesterday said its net income for the first nine months of the year is expected to rise more than 50 percent year-on-year, mainly buoyed by strong demand for auto parts and cars in the world's fastest-growing auto market.
The listed arm of Shanghai Automotive Industry Corp, China's leading carmaker, said falling costs and expanding production contributed to a steady increase in the company's operating income.
Shanghai Auto reported a 136 percent year-on-year climb in first-half earnings.
"Shanghai Auto's net income increase in the first three quarters may be even higher than its expectation of 50 percent," said Lu Qing, an analyst with Haitong Securities.
"Most of the listed vehicle manufacturers have good performance, especially those producing sedans," said Lu.
"Their full-year reports may be better, as the year-end is always a golden period for car sales," Lu told Shanghai Daily.
Shanghai Auto's share prices dropped 1.36 percent yesterday to close at 11.6 yuan (US$1.40).
Shanghai Auto, which is 70 percent owned by Shanghai Automotive Industry Corp, mainly makes vehicle parts.
The company's 20-percent stake in Shanghai General Motors Corp Ltd also contributed to its whopping profit increase.
Shanghai Automotive is a major automotive supplier to Volkswagen and its local joint ventures.
China, in which one out of 120 people has a vehicle, is the fastest-growing vehicle market in the world.
In the first nine months of 2003, China manufactured more than 3.26 million vehicles, securing 35.7 percent increase year-on-year.
Car sales in China jumped 56 percent to 1.126 million units last year, resulting in a dynamic growth in demand for auto parts.
Meanwhile, the central government is also mulling policies to push the industry to use more home-made parts.
The Chinese government recently issued a new policy to allow automakers to lend money to buyers, which also helped stimulate auto sales in the country.
(Shanghai Daily October 17, 2003)
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