China Automotive Systems Inc. Earnings Cheat Sheet: Net Income Wasn’t What Wall Street Wanted

China Automotive Systems Inc. (NASDAQ:CAAS) reported its results for the third quarter. China Automotive Systems is a holding company that, through joint ventures in China and a wholly-owned subsidiary, manufactures power steering systems and other component parts for automobiles.

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China Automotive Systems Earnings Cheat Sheet for the Third Quarter

Results: Net income for the auto parts company fell to $9 million (10 cents per share) vs. $13.8 million (26 cents per share) a year earlier. This is a decline of 35% from the year earlier quarter.

Revenue: Fell 1.4% to $75 million from the year earlier quarter.

Actual vs. Wall St. Expectations: CAAS fell short of the mean analyst estimate of 15 cents per share. It fell short of the average revenue estimate of $82 million.

Quoting Management: Mr. Qizhou Wu, Chief Executive Officer of China Automotive Systems, commented, “The third quarter’s results continue to show a head wind in the Chinese auto market. The Chinese government has sharply restricted its incentive policies and tightened monetary policy to curb inflation, significantly slowing China’s auto sales. In January, China resumed its sales tax of 10% from 7.5% on vehicles with engines of 1.6 liters or smaller. Subsidies given for trade-in vehicles and to rural residents to buy vehicles were also phased out. Tightened loan availability, paired with continued slowing of the general economic environment in China, depressed overall sales from previous highs.”

Key Stats:

The company has now seen net income fall in each of the last two quarters. In the second quarter, net income fell 49.1% from the year earlier quarter.

The company has now fallen short of estimates in the last two quarters. In the second quarter, it missed expectations by 10 cents with net income of 22 cents versus a mean estimate of net income of 32 cents per share.

Revenue has fallen in the past two quarters. In the second quarter, revenue declined 3% to $82.5 million from the year earlier quarter.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is 22 cents per share, down from 32 cents ninety days ago. For the fiscal year, the average estimate has moved down from $1.14 a share to 74 cents over the last ninety days.

Competitors to Watch: Sorl Auto Parts, Inc. (NASDAQ:SORL), Tenneco Inc. (NYSE:TEN), Wonder Auto Tech., Inc. (NASDAQ:WATG), Meritor Inc (MTOR), TRW Automotive Hldgs. Corp. (NYSE:TRW), Tower International (NYSE:TOWR), Dana Holding Corporation (NYSE:DAN), American Axle & Manufact. Hldgs., Inc. (NYSE:AXL), and Federal-Mogul Corporation (NASDAQ:FDML).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)