Sorl Auto Parts, Inc. (NASDAQ:SORL) Raises Guidance after Stellar Q3

Sorl Auto Parts, Inc. (NASDAQ:SORL)

Shares of Sorl Auto Parts, Inc. (NASDAQ:SORL) gained 20.4% after the leading manufacturer and distributor of automotive brake systems reported Q3 financial results that beat Wall Street estimates. According to the Chief Executive Officer, Xiaoping Zhang, demand for the company’s products continue to increase across all three business segments.

Sorl Auto Parts, Inc. (NASDAQ:SORL)

Sorl Sales Growth

Investors reacted to the better than expected financial results by pushing the stock up the chart, after coming under pressure in recent weeks. The stock is currently trading in an uptrend with immediate resistance at $8.40, above which it could make a push for the 52-week high of $9.74 a share. For the full year, the stock is up by more than 90%.

For the three months ended September 30, 2017, Sorl Auto Parts, Inc. (NASDAQ:SORL) generated sales of $101.3 million – representing a 59% year over year growth. Revenues from international markets increased 19.1% to $19.3 million due to growing global customer base. Net sales for the first nine months of the year increased 29.6% to $72.9 million.

Gross profit in the quarter grew 44.4% to $27.3 million compared to $18.9 million reported last year. However, gross margin dropped to 26.9% from 29.7% due to higher raw materials costs and price promotion designed to increase market share.

“We are excited to report that our sales growth in all three segments accelerated during the quarter. We continue to capture market share in the Chinese commercial vehicle braking market with our new advanced products and attractive pricing,” said Mr. Zhang.

New Guidance

Net income attributed to shareholders increased 165% to $8.6 million or $0.44 a share compared to $3.2 million or $0.17 a share reported last year. Net income for the first nine months of the year nearly doubled to $21.4 million or $1.11 a share from $10.9 million or $0.57 a share reported last year.

Sorl Auto Parts, Inc. (NASDAQ:SORL) exited the third quarter with cash and cash equivalent of $7.6 million. Inventories in the quarter increased to $83.1 million from $65.8 million as of December 31, 2018.

Buoyed by the strong performance in the third quarter, Sorl Auto Parts, Inc. (NASDAQ:SORL) management has increased its full-year guidance for net sales, from $315 million to approximately $370 million. The company also expects net income of $30.5 million up from an initial guidance of $27.5 million.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

Sorl Auto Parts, Inc. (NASDAQ:SORL)

Sorl Auto Parts, Inc. (NASDAQ:SORL) Reports A 37.4% Q1 Sales Increase

Sorl Auto Parts, Inc. (NASDAQ:SORL)

Sorl Auto Parts, Inc. (NASDAQ:SORL) is off to a positive 2017 start with a 37.4% increase in quarterly net sales. The company reported $73.9 million in net sales for Q1 2017 compared to $53.8 million that was reported in Q1 2016. Generally, the company reported a significant increase in its sales for Q1 2017. Revenue from the company’s domestic OEM customers amounted to $41.8 million in Q1 2017. This translates to 48.8% improvement from the $28.1 million reported in Q1 2016. The increase resulted from an increase in truck sales in Q12017. There was 22.9% improvement in sales from commercial vehicles, 30.9% increase in sales from trucks and a whopping 93.0% increase in sales from heavy-duty vehicles.

There was impressive improvement in aftermarket sales from the Chinese market with the company reporting $18.1 million in sales which translates to 37.1% increase from the $13.2 million reported in Q1 2016. Sorl Auto Parts, Inc. (NASDAQ:SORL) aftermarket sales benefited from sale of new vehicles in China as well as the expiry of the OEM warranties. The company saw a 12% improvement in its international revenue to close the quarter at $14 million up from the $12.5 million reported in Q1 2016. The growth is a product of the company’s efforts to grow its customer base in a number of international markets.

In Q1 2017, Sorl Auto Parts, Inc. (NASDAQ:SORL) reported a 42.4% increase in its quarterly gross profits to $20.5 million as compared to $14.4 million that the company reported in Q12016. There was a slight improvement in gross margin to 27.8% from the 26.8% that was reported in Q12016.

During the quarter, Sorl Auto Parts, Inc. (NASDAQ:SORL) reported $11.7 million in operating expenses compared to $14.2 that was reported in Q1 2016. It is this drop in operating expenses that led to a 41.6% decreased in general and administrative expenses. Total operation expenses represent 15.8% of the company’s total revenue reported in Q1 2017. In Q1 2016, total operating expenses amounted to 26.4% of the total revenue reported in the quarter.

Sales and distribution activities led to expenses amounting to $5.6 million which is about the same as what was reported in Q1 2016. Expenses from sales and distribution activities represents 7.6% of the total revenue for the quarter. In Q1 2016, similar expenses accounted for 10.3% of the total revenue reported in the quarter.

General and administrative expenses during the quarter amounted to $4 million which amounts to 5.5% of the total revenue in the quarter. Sorl Auto Parts, Inc. (NASDAQ:SORL) reported $6.9 million or 12.9% of the total revenue in Q1 2016.

In the Friday session, Sorl Auto Parts, Inc. (NASDAQ:SORL) dropped $0.55 or 5.93% to close the session at $8.72 with a market cap of $179.57M.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: James Marion is a University of Houston student studying Business with a concentration in Finance.

Sorl Auto Parts, Inc. (NASDAQ:SORL)

Market Continues to Push Up Sorl Auto Parts, Inc. (NASDAQ:SORL)

Sorl Auto Parts, Inc. (NASDAQ:SORL)

Sorl Auto Parts, Inc. (NASDAQ:SORL) has beaten street earnings estimates four quarters in a row. It has not been above $6 for the past 5+ years but in the last few days SORL shares have been on a run and today are trading around $9.25 on huge volumes – over 25 times their 30-day, daily average. As might be expected, SORL’s Relative Strength Index (RSI) is 88+ – near nosebleed levels. Traders generally believe that a stock’s RSI is on “overbought” territory once it breeches 70.

Still, optimism is warranted. YTD shares of Sorl Auto Parts, Inc. (NASDAQ:SORL) are up over 130%, up 71% for the month, and up 57% for the week. Prior to today their 52-week high was $7.80 which was just $0.20 shy of the street’s target price of $8.00. That target price was shattered by this morning’s market action. SORL shares closed at $7.13 on Friday and opened at $7.47 before hitting and inter-day high of $9.50 as of 12:00 PM EST. Currently shares of Sorl Auto Parts, Inc. (NASDAQ:SORL) are trading over 165% above their 200-day simple moving average.

Although having a market-cap of around $135 million, the Chinese auto parts manufacturer is not covered by many analysts. That may change given the company’s past four quarterly earnings reports. Sorl Auto Parts, Inc. (NASDAQ:SORL) reported Q1 2017 earnings last week. Net sales improved by 37.4% to $74.9 million. Q1 2016’s figure was just $53.8 million. Gross profit increased by 42% over Q1 2016, and their margins increased from 26.8% to 27.8%. The real blockbuster number came in net income attributable to shareholders. In Q1 2016 that figure was $0.02 – for Q1 2017 it was $0.36. Impressive by any benchmark.

Sorl Auto Parts, Inc. (NASDAQ:SORL) management has increased annual guidance of net sales to approximately $315 million and net income of around $27.5 million.

Ms. Jinrui Yu, SORL’s Chief Operating Officer, stated “We continue to roll out new advanced braking products which immediately gain traction in the market due to their enhanced performance, added features and improved reliability. We have implemented stricter cost controls, purchased more advanced machinery and moved into new facilities to improve our efficiency and increase our profitability,”.

Of note is the lack of dilution of SORL shares. In 2012, the company reported 19.31 million outstanding shares – the same number they reported in 2016. It would not be unusual for a company to issue more shares over the years to raise funds for expansion related activities. However, to the credit of Sorl Auto Parts, Inc. (NASDAQ:SORL) they have managed increased sales and profits with any such need to dilute shareholder equity.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.