(Yicai Global) June 8 -- Zhongtong Bus Holding Co. [SHE:000957], Zhengzhou Yutong Bus Co. [SHA:600066] and King Long Bus Co. [SHA:600686] are beset by falling production and sales, Sina.com reported.
Zhongtai Securities Co. has concluded that the funding shortage afflicting these enterprises results from massive reductions in new energy subsidies and these are the root cause for the chilling of the entire bus industry.
Zhongtong Bus disclosed its production and sales results for last month yesterday. The output of buses during the January-May was 3,991, dropping 44 percent over the previous year, data shows. Zhongtong's bus sales decreased 47 percent in first five months of this year.
Zhongtong Bus is not the only enterprise suffering an output and sales decline. The production and sales figures for last month outed by Yutong Bus and King Long Bus also show falling output and sales in both enterprises. In the first five months, the accumulated output of Yutong Bus was down 27 percent down, while sales fell 29 percent, while the output of King Long Bus dropped 36 percent and its sales dipped 35 percent, data show.
New energy vehicles (NEVs) have also performed poorly in capital markets. The NEV index dropped 6 percent in May. "For buses, the major resistance lies in large subsidy reductions, exposing enterprises to substantial difficulties with profits and funding," Zhongtai Securities determined.
Affected by lower NEV subsidies, the operating income and net profits of bus enterprises such as Zhongtong Bus, Yutong Bus and King Long Bus declined significantly in the first quarter, during which the operating income of Zhongtong Bus dropped 49 percent, Yutong Bus slipped 25 percent and King Long Bus slid 62 percent over the previous year. The first-quarter net profits of Zhongtong Bus dropped 67 percent, Yutong Bus 16 percent and King Long Bus 195 percent.
Although the bus market guttered last month, it is expected to rebound in the second half from the gradual implementation of local subsidy policies in the first half, and gradual regulation of enterprise funds and technology. Bus sales will start to resurge in June and July, and transaction volume will boom in the second half, a study by Soochow Securities Co. predicts.