SORL Auto Parts Down Despite Better-Than-Expected Revenue

is down on Monday despite topping estimates on the revenue front. The Ruian City, China-based firm posted a fourth quarter revenue of $48.8 million, down 13 percent year-over-year. However, it surpassed analysts' expectations of $48.09 million. Full-year revenue finished down around 11.5 percent at $192.2 million, but edged the Wall Street consensus of about $191.5 million. Meanwhile, fourth quarter and 2012 EPS finished in line with estimates. For the quarter, SORL's earnings grew 23.5 percent to match expectations of $0.21 per share. Total 2012 EPS declined over 23 percent to $0.66, but matched analysts' expectations.

According to SORL, its sales decline was due to continuing weakness in demand for commercial vehicles in China. GDP grew by 7.8 percent in 2012 in the world's second-largest economy, which was its lowest growth rate since 1999, as notes SORL. Specifically, according to SORL, a decrease in investments in infrastructure and other fixed assets reduced the need for trucks, including heavy-duty trucks, which experienced a nearly 16 percent decline in the fourth quarter versus Q4 2011.

SORL's aftermarket sales rose nearly two percent in 2012. The company finished with sales of $45.4 million in this segment.

SORL's international sales dropped seven percent for the year to $53 million. It blames this decline on “the effects of currency fluctuations of the Chinese Renminbi and reduced inventories held by some distributors.”

In December, the Chinese Government renewed the brake manufacturer's high-tech enterprise status, which grants it a preferred tax rate of 15 percent through 2014.

In November, SORL received a 400-unit order from Shen Zhen Wuzhoulong Motors Group for its new air compressor. According to the company, the product sells at 8,000 RMB per unit. The deal was worth over $500,000 based on the current exchange rate.

SORL projects net sales of approximately $207 million. If this pans out, the company will top the Wall Street consensus of around $203 million.

On word of its better-than-expected revenue, SORL opened the week briefly above water. The stock rose nearly two percent in the first hour of trading. However, its fortunes quickly reversed. SORL is down around 0.5 percent on Monday.