SORL Auto Parts Inc. (NASDAQ:SORL) had generated considerable returns for investors last year. The micro-cap company’s share price ascended over 100% in the past twelve months, thanks to a sharp growth in revenues.
What’s more, the efficient management and allocation of resources into high margin products has been turning big revenue growth into massive profits.
How A Smart Expansion Strategy Led To Growth For SORL Auto Parts Inc.
SORL’s business expansion strategies led it to post revenue growth of 59% in the latest quarter. Its strategy of investing in high-growth Chinese markets added $31.5 million to the total sales of $101 million. SORL’s aftermarket auto parts sales in China increased 76.0% Y/Y to $31.5 in the latest quarter.
Moreover, its investments in domestic OEM products allowed it to increase local customers by 70.6% year over year, to $50.5 million by Q3 FY2017.
In particular, SORL’s sales from ‘commercial vehicle brakes’ were standing around $85.3 million, a growth of 62.5% year-over-year. This represents 84.2% of overall sales in the third quarter of 2017. The progress in ‘passenger vehicle brake systems’ was also impressive, up 42.9% year-over-year to $16.0 million.
Mr. Xiaoping Zhang, SORL’s Chairman and Chief Executive Officer, stated, “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.”
>>SORL Auto Parts Win Big. Read About It Here.
Several Catalysts Offers Room For Share Price Growth
SORL’s management expects total sales in the range of $370.0 million for FY2017, significantly higher from the past year sales of $272 million. Net income is also expected to surge from $19 million in the past year to $30 million in FY2017.
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Although SORL shares gained more than 100% last year, strong financial numbers provided the support to its valuations. Thus, its valuations appear attractive and supportive for the potential share price growth. SORL shares are trading around only 3.9 times to earnings and 0.3 times to sales in the trailing twelve months, when the industry average is around 15.7 times and 0.9 times, respectively.
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