The long, winding, and difficult road of diesel engine maker China Yuchai
So what's new? The company reported earnings today, and they weren't good. Since the company doesn't report quarterly results, I had to go back into past filings and jerry-rig the figures to estimate how the company did. It looks like sales fell about 12% year over year, while the company reversed year-ago operating income into an operating loss.
Although units shipped rose 11% for the year, the company saw its product mix shift toward lighter-duty engines, which carry lower margins. What's more, the company had to deal with higher raw material costs and tightening credit, which I presume is part of the government's effort to keep a lid on growth and inflation.
The company made roughly $43.5 million worth of provisions for bad loans and trade balances to a related company. These costs rankle me; they're the wages of the self-dealing that has worried me about this company before. It's also important to note that the reorganization agreement from early April 2005 still has not been implemented; in fact, it's been extended until Dec. 31, 2006.
Clearly, then, we're not talking about DaimlerChrysler
So while it's true that the stock "looks cheap," it's equally true that this isn't anything like a Chinese version of Cummins
Further Foolishness on diesel doozies:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).