JAC invested 837 million in wading heavy-duty trucks

Jianghuai Automobile (600418) recently announced that its heavy-duty truck project, which involves a total investment of 837 million yuan, has been approved by the National Development and Reform Commission. This marks a significant step forward for the company as it expands its presence in the commercial vehicle sector. Earlier reports had suggested that the project was expected to cost nearly 1 billion yuan and had already received government clearance. However, the official statement released yesterday clarified that the actual investment stands at 837 million yuan. According to the plan, the project aims to produce 40,000 heavy-duty trucks annually, with 647 million yuan allocated for fixed assets and 190 million yuan for working capital. For the first time, Jianghuai provided detailed financial projections. The company commissioned the Dongfeng Design and Research Institute to submit a report to the National Development and Reform Commission, estimating that the project will take six years to reach full production. Once operational, the project is expected to generate an average annual sales revenue of 4.48 billion yuan, with an average annual profit of 334 million yuan and a post-tax profit of 224 million yuan. Wang Deian, an analyst from Guolian Securities’ Automotive Industry Division, highlighted that Jianghuai’s entry into the medium and heavy truck market began in April 2005. "Previously, the company focused mainly on passenger car chassis and light trucks, so it was a latecomer in the heavy truck segment," he noted. Regarding the impact of the project on Jianghuai’s stock price, Wang said there is no significant effect. He explained that the 837 million yuan investment is relatively small within the broader context of the heavy truck industry, and the project is expected to take six years before reaching full production. Wang also pointed out that Jianghuai has updated its earnings estimates. Previously circulated figures in the securities industry did not align with the latest announcement. For instance, sales revenue was adjusted downward from 6 billion yuan to 4.48 billion yuan, and net profit was revised from an estimated 400 million yuan to 334 million yuan. After two days of gains, Jianghuai Automobile rose 2.79% along with the broader market, closing at 8.10 yuan per share. The company's continued expansion into the heavy truck segment signals its long-term strategy to diversify and strengthen its position in the automotive industry.

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