Zhenhua heavy industry losses up to 700 million by asset depreciation drag

Zhenhua Heavy Industry (600320. SH) today announced the annual report, the 2010 operating income of 17.116 billion yuan, reduced 37.9% from a year earlier, net profit of-695 million yuan, the year-on-year decrease of 182.73%.　　Behind the bleak performance is up to 1.188 billion yuan in fixed asset depreciation, while the company focused on marine heavy equipment 2010 years of operating income is only 2.5913 million yuan, the year-on-year reduction of 28.7%. "There has been an expansion of capacity and expansion of capacity that has led to increased investment, but it has been hit by the economic crisis and the orders have fallen sharply, as the company has not thought of."　　Guotai industry analyst Lu Juan told the first financial daily reporter. Zhenhua heavy industry in the 2010 annual report, said, "At the end of 2009, the lack of effective orders in the hands of the traditional port machine market demand for a large contraction, the continued downturn in overseas markets, coupled with the rise in raw material prices, so that companies such export equipment manufacturing enterprises than the simple domestic manufacturers are facing a more serious practical difficulties. "As a result of the financial crisis, the company's 2009 new orders were only about 1.7 billion U.S. dollars, far below the 2007 and 2008 levels of 5 billion dollars."　　Not only that, the price of new orders fell by about 15% Year-on-year. "Orders typically have a one-year lag, and the 2010 production is actually 2009 orders."　　"Lu Juan said. Contrary to the decline in orders, Zhenhua Heavy industry has been investing in fixed assets.　　According to statistics, Zhenhua heavy industry invested more than 4 billion yuan in 2009, mainly for Nantong, Changxing, Nanhui and other bases of infrastructure, construction and other major projects such as towing barge.　　The construction of a large number of projects led to the increase in fixed assets depreciation, in 2009, the company fixed assets depreciation of 1.07 billion yuan, 2010 further increase to 1.188 billion yuan. High-priced inventory of raw materials has also seriously affected the company's performance.　　Northeast Securities pointed out that the company's 2010 steel is mainly in the first half of 2008 procurement of inventory, the purchase price than the 2010 market price of 500 yuan ~1000 yuan/ton, in accordance with the annual needs of 1 million tons of steel to calculate, steel price factors on the 2010 company gross margin of the impact of 3%-6%. Zhenhua heavy industry focused on the development of marine heavy equipment cycle is very long, 2010 operating income is only 2.5913 million yuan, the year-on-year decrease of 28.7%.　　Northeast Securities analyst Zhou Shili pointed out that the company's main products production cycle is longer, of which the shore Bridge is 8-14 months, ocean engineering for 2-3 years, leading to 2010 main business income quarterly decline. However, 2011 Zhenhua Heavy industry performance or will rebound, the company 2010 reported that Zhenhua heavy industry in 2010 to obtain orders of 3 billion U.S. dollars, than the 2009 1.7 billion dollar has improved considerably.　　Lu Juan that the traditional business of Zhenhua heavy industry has stepped out of the bottom and is expected to make a loss in 2011. Zhenhua Heavy Industry proposed 2011-Year business objectives, the new contract amount of 4 billion U.S. dollars, to achieveSales of 20 billion yuan. The Great Wall Securities analyst Chopeta in his report that the financial crisis in the most pessimistic period of the trough performance reflected in 2010, 2011 Zhenhua Heavy Industry performance is expected to gradually rebound. The company plans 2011 annual operating income to reach 20 billion yuan break-even point, to achieve capital preservation profit, 2012 to achieve a small growth. Responsible Editor: NF058