SAIC’s third quarter profit up sky high

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From Reuters:

Top Chinese automaker SAIC Motor Corp (600104.SS) said its third-quarter net profit jumped 47 percent on solid demand for cars made with its two major partners, General Motors GM.UL and Volkswagen (VOWG.DE).

The results, which were in line with forecasts, come a day after rival BYD (1211.HK) reported a 99 percent plunge in third-quarter earnings as its aggressive sales strategy backfired when the market began to slow.

Analysts say SAIC’s earnings could stay solid in the fourth quarter as consumers rush to buy cars before the end of the year on worries that Beijing may scale back or even scrap incentives introduced last year to boost consumption.

“SAIC has been holding up better than most of its rivals because GM and Volkswagen are long-established brands in the country,” said Chen Liang, an analyst at Huatai Securities.

“Both Shanghai GM and Volkswagen have been outgrowing the market even during the summer months when the overall car sales growth slowed down considerably.”

SAIC, which also makes its own-brand cars, such as Roewe 550, booked a July-September net profit of 3.71 billion yuan ($556.9 million), compared with a 2.53 billion yuan a year earlier. Three analysts polled by Reuters had forecast 3.6 billion yuan on average.

In the first nine months, turnover soared 130 percent to 229.2 billion yuan, it said in a stock exchange filing.

SAIC’s broad portfolio of sedans, trucks, buses, sport utility vehicles, multi-purpose vehicles, mini-vans and pickup trucks, makes it more resilient than peers who make only cars, analysts said.

Its flagship car venture with GM reported a 35 percent sales gain in July, while sales from its Volkswagen AG tie-up rose 42 percent, both well ahead of a 14 percent rise for the market — its slowest growth in 15 months.

SAIC Chairman Hu Maoyuan told shareholders in July that the company was confident of hitting its 2010 sales target of 3 million vehicles.

SAIC shares closed down 5 percent in Shanghai on Wednesday before the earnings results, lagging a 1.5 percent fall in the benchmark index .SSEC.

They have soared about 85 percent from a low in late June to a record high this week. The broader market has gained about 27 percent since June.

MARKENT RETURNING TO NORMAL

China has been a major bright spot in a global industry struggling to recover from a steep downturn in 2009.

But car sales growth in the country, now the world’s largest auto market, has been slowing since May after rampant expansion in 2009 and the first few months of 2010.