Siasun Robot &Automation:Q3results remain disappointing;expense ratios go up

Q: How did the results compare vs. expectations?

    A: 9M16 revenue was Rmb1.2bn (+9% YoY) and net profit was Rmb250m (+7% YoY).

    Revenue grew 7% YoY in Q3, a slight slowdown from H1 (+10% YoY). Meanwhile,net profit jumped 11% YoY, compared to the 5% YoY growth in H1. 9M16revenue/net profit growth came in below our (16%/12%) and consensus (23%/23%)expectations for the full year.

    Q: What were the most noteworthy areas in the results?

    A: Q3 gross margin stood at 31.5%, down 1ppt from H1. Meanwhile,selling/administrative expenses soared 136%/75% YoY; the administrative expenseratio was 17%, up 4ppts compared with H1; operating profit fell 40% YoY.

    Q: Has the company's outlook/guidance changed?

    A: Funded projects are going smoothly. Management is optimistic about thedevelopment of smart manufacturing and service robotics.

    Q: How would we expect investors to react?

    A: We expect the market to react negatively to the disappointing results.