Hot Stock Buzz: China Automotive Systems Inc. (NASDAQ: CAAS)

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Email: chastitymessenger@importtourism.com
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WUHAN, China, November 5, 2019 – Shares of China Automotive Systems Inc. (NASDAQ: CAAS) showed the bearish trend with a lower momentum of -0.01% to $1.97. The company traded total volume of 14.558K shares as contrast to its average volume of 15.15K shares. The company has a market value of $62.70M and about 31.83M shares outstanding.

In the second quarter of 2019, China Automotive Systems Inc. (NASDAQ: CAAS) reported 15.9% decrease in net sales to $105.70M, compared to $125.80M in the same quarter of 2018. Net sales of traditional steering products declined by 15.9% as demand weakened in the Chinese domestic brand automobile market. Additionally, Company’s sales to its North American customers declined by $1.10M. Sales of electric power steering (“EPS”) represented 21.4% of total net sales.

Gross profit decreased to $15.20M in the second quarter of 2019, compared to $17.00M in the second quarter of 2018. The gross margin was 14.4% in the second quarter of 2019, versus 13.5% in the second quarter of 2018. The gross profit decrease was mainly due to lower sales, higher unit cost and a change in product mix.

Gain on other sales was $2.50M in the second quarter of 2019, compared to $1.00M in the second quarter of 2018. Selling expenses were $3.90M in the second quarter of 2019, compared to $4.90M in the second quarter of 2018. The decrease was mainly due to lower logistics expenses related to decreased sales during the quarter. Selling expenses represented 3.7% of net sales in the second quarter of 2019 compared with 3.9% in the second quarter of 2018.

General and administrative expenses (“G&A expenses”) were $4.40M in the second quarter of each of 2019 and 2018. G&A expenses represented 4.2% of net sales in the second quarter of 2019 compared to 3.5% in the second quarter of 2018. The percentage increase was mainly due to reduced sales in the second quarter of 2019.

Research and development expenses (“R&D expenses”) decreased 18.5% to $6.60M in the second quarter of 2019, compared to $8.10M in the second quarter of 2018. R&D expenses continue to focus on the development of the Company’s EPS and other new products. R&D expenses represented 6.2% of sales in the second quarter of 2019, compared with 6.4% in the second quarter of 2018.

Income from operations was $2.70M in the second quarter of 2019, compared to $0.60M in the same quarter of 2018. The increase was primarily due to a higher gain on other sales and lower operating costs. As a percentage of net sales, the operating margin was 2.6% in the second quarter of 2019, compared to 0.5% in the second quarter of 2018.

Net financial income in the second quarter of 2019 was $1.60M compared with $0.90M in the second quarter of 2018. Income before income tax expenses and equity in earnings of affiliated companies increased 143.5% to $3.10M in the second quarter of 2019, compared to $1.30M in the second quarter of 2018.

Net income attributable to parent company’s common shareholders increased 196.3% to $2.50M in the second quarter of 2019, compared to net income attributable to parent company’s common shareholders of $0.80M in the corresponding quarter of 2018. Diluted earnings per share were $0.08 in the second quarter of 2019, compared to diluted earnings per share of $0.03 in the second quarter of 2018. The weighted average number of diluted common shares outstanding was 31,499,577 in the second quarter of 2019, compared to 31,647,305 in the second quarter of 2018.

Business Outlook:

Management revised its revenue guidance for the full year 2019 to $430.0M from US$510.0M. This target is based on the Company’s current views on operating and market conditions, which are subject to change.

The Company offered net profit margin of 0.30% while its gross profit margin was 12.40%. ROE was recorded as 0.40% while beta factor was 1.56. The stock, as of recent close, has shown the weekly upbeat performance of 1.54% which was maintained at -19.27% in this year.

Chastity Messenger

Chastity Messenger

I am Chastity Messenger and I give “Import Tourism” an insight into the most recent news hitting the “Consumer Goods” sector in Wall Street. I have been an independent financial adviser for over 11 years in the city and in recent years turned my experience in finance and passion for journalism into a full time role. I perform analysis of Companies and publicize valuable information for shareholder community. Address: 4437 Yorkshire Circle, Greenville, NC 27834, USA Phone: (+1) 252-274-1912 Email: chastitymessenger@importtourism.com