Yutong Bus: Large shareholder overweight shows undervalued share price

--Zhao Yang recently, Yutong Bus issued a notice that the holding shareholder Yutong Group in October 2008, through the two-level market increased Yu-tong passenger car 4.41 million shares, follow-up will continue to overweight, the proportion does not exceed the company's total share capital of 2%, and pledged to not reduce its holdings in the next 12 months. In the continued rise this year, a-share market is very active, whether it is a large trading platform or two-tier market share sales have increased frequently, but similar to Yutong bus major shareholders, in the market so hot, but also overweight their own shares of the company is not rare.　　In fact, the benefit of the macro-economic recovery, the second half of the company's performance is likely to go out of the trough, large shareholder's overweight behavior or will accelerate the company's stock price upward repair! The weak environment highlights the leading advantage in the first half of this year, in the automotive industry revitalization planning and car to the countryside, such as the promotion of a variety of favorable policies, passenger cars, micro-commercial vehicles, such as showing a blowout situation, but the sales of large and medium-sized passenger cars is not very optimistic, according to Yutong Yu-Tong passenger car cumulative first half of the total production of 11,432 cars, down 22.49% year-on-year, 11,361 vehicles, fell 25.9%. The decline in overall sales has made it hard for the company to reverse its woes.　　Since the lowest point in November 2008, the company's cumulative increase of 65.6%, far behind the same market. 2008, under the influence of macroeconomic decline and external demand weakness, Yutong bus's overall operation encountered greater difficulties, from the sales data, passenger cars significantly behind the overall level of the automotive industry.　　Even if the longitudinal view, the bus industry is basically experiencing the "SARS" since the worst historical period. However, from the company's 08 reported earnings, in the weak, the company's operation still has a lot of bright spots. Data show that the company since 97, the main business net profit has maintained a sustained growth in 2008, in gross profit margin of 1.38% per cent year-on-year decline in the premise, net profit margin also increased by 1.6%, from the financial data can be seen, its main attributable to the Company's inventory and bad debt preparation significantly reduced. In the context of the deterioration of the overall environment, the company can also accelerate the recovery of accounts receivable and inventory turnover, fully demonstrated the strong position of the bus leader and strong management ability. In addition, the company's overall market share has also increased.　　Sales figures for January-May showed a 1% increase in the company's market share and a 1% per cent decline in the competitor's Golden Dragon system.　　The second half of the sales will be significantly increased according to industry characteristics and internal and external economic recovery, the second half of 09 Yutong passenger car performance regardless of the chain or year-on-year will show significant growth. The chain view, the medium and broad passenger car industry has the obvious seasonal characteristics, the seasonal characteristics of the sales of medium and medium-sized passenger cars from the 1 quarter began to rise quarterly sales, so the second half of the sales generally better than the first half.　　According to previous years, the company's income and profits in the second half of the year accounted for 60% and 67% respectively. On a year-on-year perspective,CICC Wang Zhihui pointed out that in the second half of 09, the overall passenger car market, light passenger sales will shift to positive growth, is expected to increase 20%. 07 China's large passenger cars (more than 6 meters) to maintain the volume of 938,000 vehicles, among them, the majority of customers (more than 7 meters) holdings accounted for more than 80%, about 750,000 vehicles in 08 will rise to more than 800,000 vehicles, in accordance with the 8 years of end-of-life calculation, under normal circumstances, large and medium domestic customers in the annual update demand in the 100,000 around,　　This 1 ~ May Big Chinese passenger sales of only 38,600 vehicles, only domestic renewal demand is enough to promote the second half of the sales apparent rebound. Yutong Bus as the industry leader, the second half of the growth rate will be higher than the overall level of the industry.　　July 1, 08, the implementation of the State III standards, 08 in the first half of a certain degree of early consumption, resulting in the second half of the 08 monthly sales base is lower, 09 in the second half will be easier to achieve positive growth. In addition, the company so far last year by the decline in exports significantly. Whether exports bottomed out or when the rebound depends on the strength of the peripheral economic recovery. At present, passenger car export sales bottom is more likely, because the main export market of bus companies in the Middle East, South America, Africa, Central Asia and other regions of the economy has stabilized, some areas even because of the rapid rebound in commodity prices and rapid economic recovery.　　As a result, passenger car export sales rebound in the second half of the possibility of greater.　　Wanguo Securities is expected, the company 09, 10 forecast EPS is 0.83 yuan, 0.98 yuan respectively, corresponding to the current stock price PE is 15 times times and 13 times times respectively, compared with other coaches in the industry (an-kai bus, medium-pass bus), the valuation is significantly lower (an-kai, in the 09 PE between 35-40 times). The company's large shareholder Yu Tong Group's overweight behavior shows the company's emphasis on market value management. At the same time, from the point of view of industrial capital, the company's stock price is underestimated. According to Wanguo's earnings forecasts, the company's reasonable stock price is 16.6 yuan, with a 20 times-fold earnings ratio, which has a 15% rise in prices compared with its current share price of 14.38 yuan on July 9. In the industry inflection point clear premise, large shareholder will become the company's stock price catalyst.