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Sany Heavy Industry: centralized processing of assets and bad debts will release flexibility next year

Sany Heavy Industry: centralized processing of assets and bad debts will release flexibility next year

China Construction machinery information


the company announced today: (1) it plans to transfer 100% of the equity of Beijing Sany Heavy machinery held by the listed company to Shenzhen Sany technology, a holding subsidiary of the group, at 4.077 billion yuan; (2) It is proposed to transfer part of the accounts receivable of Sany automobile manufacturing company and sany automobile hoisting machinery company to Sany group company, the controlling shareholder of the company


1. The transfer of land has obtained 1.4 billion investment income this year, and the depreciation will decrease next year.

Sany Heavy Industry transferred its 100% equity of Beijing Sany Heavy Machinery Co., Ltd. to Shenzhen Sany technology at the price of 4.077 billion yuan. Sany technology is a subsidiary of Sany group (holding 70.75%). The main assets transferred are two pieces of industrial land in Beijing and Shanghai, totaling 500 mu. The group will be used for the development of industrial parks in the future. As of July 1st, 2016, Beijing Sany Heavy Machinery Co., Ltd. had total assets of 4.089 billion yuan and net assets of 2.675 billion yuan. Through this transfer, the listed company obtained 1.4 billion investment income. At the same time, due to the reduction of fixed assets, the depreciation will decline next year

2. Debt restructuring, centralized treatment of bad debts, and the provision for bad debts of accounts receivable will decline significantly next year

(1) Sany automobile manufacturing company (Sany pumping branch) transferred the accounts receivable estimated at 2.534 billion to the controlling shareholder Sany group, with an impairment loss of about 10.24. Host weight: 40kg.5 billion. The accounts receivable are mainly divided into two categories: one is accounts receivable that have been overdue by installments; The second category is the accounts receivable formed by the advance payment of rent and loan principal and interest to financial leasing companies or mortgage banks. (2) The hoisting machinery company transferred 770million receivables to the group, mainly to finance leasing companies or mortgage banks to advance rent, with a book value of 1.09 billion yuan and an impairment loss of about 320 million. Through this divestiture of non-performing assets to the group, the disposal of asset losses of 1.37 billion, which is basically hedged with the above land transfer income, has little impact on this year's performance. Most importantly, by stripping non-performing assets, Sany has effectively optimized the asset structure and improved the efficiency of capital use. Assuming that the provision for impairment of accounts receivable is accrued at the proportion of 30% of the bad debt provision plan, the provision for impairment of bad debts will decrease by 1.4 billion next year, and the value of safety protection of components such as asset pressure reducing valve or safety valve or overflow valve will be reversed. At the same time, as 4.678 billion accounts receivable are converted into 3.3 billion cash, interest income will increase by 130 million. After dealing with non-performing assets, the company will go into battle with light equipment in 2017, releasing the flexibility of performance, basically solving the problems left over by history, and improving investor confidence

excavator sales in March and December are expected to continue to double

excavator sales in December increased by 30%, including 58% in large excavation, 50% in medium excavation and 18% in small excavation. The correction in large excavation and medium excavation in the past few years is relatively large, benefiting from the recovery of infrastructure and mine investment this year. Main sales areas: the large-scale excavation is mainly in the central and western regions, including the road and bridge construction in Yunnan and Chongqing. At present, it has established good cooperative relations with hundreds of customers around the world. The investment in mines in Inner Mongolia and Shaanxi has rebounded. The medium-sized excavation is in Yunnan, Jiangsu, Guizhou and Hunan, and the small-scale excavation is in Yunnan, Hefei and Zhengzhou. The recovery of concrete machinery is not obvious, but it also increased in the third quarter. It is expected to lag behind excavators by half a year

4. Next year's performance will be flexible and maintain a strong recommendation rating

we believe that in 2017, the net profit of Sany Heavy Industry benefited from the recovery of fundamentals and the centralized treatment of non-performing assets, and the net profit is expected to exceed 2billion. The annual EPS is expected to be 0.03, 0.29, 0.34 yuan, and the dynamic pe22 times next year, which is far lower than that of the same industry. Next year, the construction machinery industry will benefit from infrastructure, PPP, the launch of nuclear power projects, the improvement of profits in the upstream raw material industry, and the demand for renewal. It is expected that the industry sales will continue to rebound. In September, we reported that the industry rating of construction machinery industry has been raised. At the same time, it once again reminds the cyclical industry to buy inflection points, and performance improvement will be the eternal investment theme. At present, Pb is also a historical low, with a safety margin

5. Risk tips

the growth rate of real estate declines, the pressure of convertible bonds and exchangeable bonds to convert shares, and the risk of raw material price rise. (China Merchants Securities)

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