Automotive industry: Will the next hot spot be a heavy truck?

In the first four months, the sales volume of the auto industry achieved rapid growth. According to statistics from the China Automobile Association, the sales volume of domestic automobiles in the first four months reached 1.153 million, an increase of 9.43% year-on-year. Among them, passenger car sales reached 831,000, an increase of 15.09%; commercial vehicle sales reached 322,100, down 3.86% year-on-year.

Small-displacement passenger vehicles are the main reason for high growth in the industry. From the perspective of sales breakdown, we find that small-displacement passenger cars are the main reason for the growth of car sales. In passenger cars, micro-passenger sales reached 171,600 units, an increase of 43.36% year-on-year; in sedan cars, the sales volume of cars with 1 litre <displacement ≤ 1.6 liters has increased from 56.29% in 2008 to April. 64.58%.

In commercial vehicles, sales of heavy trucks are still sluggish. In particular, the sluggish semi-trailer reflects the sluggishness of the logistics industry. In commercial vehicles, sales of heavy trucks continued to slump. In the previous April, sales of heavy trucks reached 164,700 units, down 33.85% year-on-year. Among them, the sales of semi-trailers for logistics transportation in April was 28.3 thousand units in April, down 69.22% year-on-year. Heavy trucks were used for semi-trailers. The proportion of sales fell from 35.90% in 2008 to 20.59% in April. We believe that the drastic decline in sales of semi-trailers reflects the fact that the domestic economy has not yet regained its vitality.

In addition, the change in seaborne freight rates from coastal coal also reflects the fact that the domestic capacity requirement has not been restored. Taking Qinhuangdao----Guangzhou's coal tariff as an example, the freight rate is still at the level of RMB 40/t.

Judging from the current car sales data, the sales of cars are more than expected, reflecting that ordinary people’s purchasing power is less affected by the economic crisis than previously expected. Judging from the monthly sales of car sales, the sales of cars exceeded our expectations. Although we expected car sales to rebound in the first quarter, sales figures in the first quarter and April exceeded our expectations, especially from 4 According to the sales data of the month, there seems to be signs of rebound in mid- to high-end vehicles. These phenomena reflect that the purchasing power of ordinary people in China is less affected than expected by the economic crisis.

Real estate business investment recovery may lead to growth of semi-trailer sales

In addition to cars in the first quarter, home sales data exceeded expectations. On the one hand, the cash flow of related companies is quickly recovered; on the other hand, its investment remains stagnant. So when companies start investing, who will be the winner? Will the next hot spot be a heavy truck?

In addition to the sales of cars in the first four months, the sales of homes far exceeded the expectations of the market at the beginning of the year. The performance of home sales at the beginning of the year was the same as that of cars. It exceeded market expectations. The sales area of ​​commercial housing in the first four months reached 176 million square meters, an increase of 17.33% year-on-year, making the situation of sales decline in the second half of last year improved.

The opening of trade unions in real estate has led to the recovery of domestic logistics and transportation. We believe that the recovery of investment in real estate companies will drive up the demand for steel, cement, and related machinery and equipment. This will lead to a recovery in the domestic logistics and transportation industry, and the continued sluggish sales of semi-trailers will also change.

On a quarterly basis, heavy-duty truck sales slowed down sharply in the third and fourth quarters of 2008, with 3Q08 heavy-duty truck sales falling 15.68% year-on-year, and 4Q08 sales falling 43.43% year-on-year.

The rapid decline in sales brought about a rapid decline in corporate profits, 4Q08 Weichai Power and China National Heavy Duty Truck suffered losses in a single season. If real estate companies increase investment in 4Q09, we believe that the sale of semi-trailers in the current period may show a clear recovery both in terms of year-on-year and a month-on-month ratio. This will also be a major stimulus to investor confidence. We expect Weifang Diesel's EPS and Sinotruk's EPS to be RMB 1.81 and RMB 0.77 respectively in 2008, with investment ratings of “buy” and “overweight” respectively.