Investment Highlights:

The company realized revenue of 20.221 billion yuan in the first three quarters, an increase of 3.14%; net profit attributable to equity holders 755 million yuan, down 15.88%, earnings per share of 0.16 yuan, below market expectations. Among them, the third quarter, the company achieved operating income of 6.177 billion yuan, an increase of 21.85%, the chain fell 4.97%; net profit of 185 million yuan, an increase of 217.66%, the chain fell 58.43%. Mainly due to lower than expected performance 癿: During the third quarter, the expense ratio is expected to exceed one-quarter of the joint venture investment income contribution below expectations.

Continue to introduce new products, gross margin stable

This year, the company launched the Uno continued, Yi Mai and other variety of high-end micro-car, car products, profitability improved significantly. Third quarter alone, the company gross margin was 18.41%, Fuji quarter alone, gross margin was essentially flat 18.59 percent, up 7.6 percentage points from last year. We expect that, as the future of the company SUV CS35, the new Changan Star Qie other new products on the amount of products the company headquarters will have some Qie gross margin improvement.

Expense ratio during a single season in the third quarter than expected

Due to substantial growth in the cost of 192 million yuan chain management, resulting in expense ratio during the company's 1.84 percentage points qoq. Administrative expenses rose ring Qie reason, we believe the company's R & D expenses mainly Qie sequential growth due to the full year, R & D expenses are expected to be higher than last year's 1.2 billion yuan decline.

Contribution to the joint venture investment income is lower than expected

Realized investment gains 283 million yuan in the third quarter, an increase of 57.22%, the chain fell 33.72%. We believe that the sharp decline in investment income qoq mainly because 癿 joint venture Changan Ford sales are not profitable 癿 MoM decline. Among them, the long Foma three quarter alone sales of 117,600, the chain fell 9.1%, although the new Fox sustained heavy volume, but by other older products Qie price, channel expansion, research and development costs increase and other factors, net profit margin is expected bicycle chain a slight decline; from the end of the year due early next year will be launched Ford Maverick wing stroke Qie two very competitive SUV, the company expects 癿 profitability next year is expected to be significantly improved. In addition, Changan Suzuki three quarter alone sales of 32,100, the chain fell 37.17%.

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