FAST NEWS: CIMC Vehicles profit soars on supply chain shortages

The Latest: Container truck manufacturer CIMC Vehicles (Group) Co. Ltd. (1839.HK; 301039.SZ) said it expects to report a profit of 1.8 billion yuan ($252 million) to 2 billion yuan for the first half of 2023, up around 400% from the 366 million yuan profit it reported in the year-ago period.

Looking Up: CIMC Vehicles attributed the strong performance to sustained inflation and supply chain shortages in the North American market, as well as strong growth in other overseas markets, according to its announcement published after markets closed on Friday.

Take Note: About half of the profit in the first half of this year came from a one-time gain involving an asset transfer. Excluding that gain, the company’s profit in the first half of the year would be 929 million yuan to 1.1 billion yuan.

Digging Deeper: CIMC Vehicles makes and sells semi-trailers to customers in China, North America and Europe. The company achieved two consecutive years of record revenues in 2020 and 2021, but deteriorating global trade due to the Russia-Ukraine conflict, and China’s strict Covid controls, caused the company’s revenue to drop 14.6% last year. But CIMC Vehicles is expected to return to strong growth this year following the end of the pandemic, with seven analysts polled by Yahoo Finance forecasting an average of 35% revenue growth this year.

Market Reaction: CIMC Vehicles’ Hong Kong-listed shares rose 3% on Monday, while its Shenzhen-listed shares rose 6.5%. Both stocks now trade at the higher end of their 52-week range.

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Reporting by Doug Young