Automotive industry: Increased energy-saving emission reduction, commercial vehicle companies worth the wait

The latest concern: At the State Council executive meeting held on the 19th, it was decided to expand the scope of subsidies and increase subsidies based on the existing retirement and replacement policies for old cars. We believe that this is the beginning of another round of stimulus plans for the Chinese government to promote overall economic development by increasing sales of the automotive industry, which has taken a strong lead in the industry. This substantial increase in subsidy funds will have a significant positive effect on sales of mid-size goods vehicles and chassis, light goods vehicles and chassis, minivans and chassis, and medium-sized passenger cars and chassis.

The three major investment themes of the auto industry in 2009 were new energy vehicles, energy conservation and emission reduction (older vehicles are in retirement for energy conservation and emission reduction) and autos going to the countryside; we maintain the overweight investment rating of the auto and accessories industry.

Taking into account that the heavy truck industry may further introduce stimulus policies, we continue to focus on Sinotruck (Buy) and Weichai Power (bold). In addition, Yutong Bus, Shanghai Automotive, Foton Motor and Changan Automobile are among the companies that we have given overweight ratings. Tianxiang Investment Consultant Co., Ltd.