JAC invested 837 million in wading heavy-duty trucks
Jianghuai Automobile (600418) recently announced that its new heavy-duty truck project, involving a total investment of 837 million yuan, has been approved by the National Development and Reform Commission. This development marks an important step in the company's expansion into the medium and heavy truck market.
Earlier reports suggested that the project was expected to cost nearly 1 billion yuan and had already received preliminary approval from the government. However, the official announcement 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 Automobile provided detailed estimates of the project’s financial returns. The company commissioned the Dongfeng Design and Research Institute to submit a report to the National Development and Reform Commission, stating that the project is expected to take six years to reach full production. Once operational, it could generate an average annual sales revenue of 4.48 billion yuan, with an estimated 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 Department, noted that Jianghuai’s focus on medium and heavy trucks began in April 2005. “Previously, the company mainly produced passenger car chassis and light trucks, so it was somewhat behind in the heavy truck segment,†he said.
Regarding the impact of the project on the company’s stock price, Wang stated that it would not have a significant effect. He pointed out that the 837 million yuan investment is relatively small within the broader context of the medium and heavy truck industry. Additionally, the project will require about six years to reach full production, meaning any financial benefits will be gradual.
Wang also highlighted that Jianghuai has revised its earnings estimates. Previously circulated figures, such as a projected sales revenue of 6 billion yuan and a net profit of 400 million yuan, do not align with the latest disclosure. The updated numbers reflect a more conservative and realistic outlook.
After two days of gains, Jianghuai Automobile rose 2.79% alongside the broader market, closing at 8.10 yuan per share on the previous trading day. This move signals continued investor confidence in the company’s long-term strategy and growth potential.
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