Source: Financial industry

According to the First Commercial Vehicle Network, in May 2022, China's heavy-duty truck market sold 47000 vehicles of various types, a year-on-year increase of -71% and a month on month increase of+7.2%; With the gradual control of the epidemic in Shanghai and other places, logistics operations across the country are gradually resuming. The policies related to national infrastructure stimulus and stable growth have been successively introduced, and the heavy truck industry has clearly benefited. Adding to the low sales base of 2021H2, heavy truck sales are expected to turn positive in the second half of this year. The industry has clearly stepped out from the bottom, and the time has come for heavy truck configuration.

In May, the sales of heavy-duty trucks were approximately 47000 units, a year-on-year increase of -71% and a month on month increase of+7.2%.

According to the First Commercial Vehicle Network, in May 2021, China's heavy-duty truck market sold 47000 vehicles of various types, a year-on-year increase of -71% and a month on month increase of+7.2%; The significant year-on-year decline in sales is mainly due to the impact of the epidemic in various regions on industries such as logistics and infrastructure, combined with a higher base in the same period last year. On a month on month basis, with the gradual control of the epidemic in various regions, sales in the heavy truck industry have shown a slight rebound. From a company by company perspective, the sales of FAW, Heavy Duty Truck, Dongfeng, Shaanxi Automobile, and Foton in May were 0.7/1.2/0.85/0.8/0500 units, respectively, with a year-on-year decrease of -82%/-64%/-74%/-64%/-57%. The significant year-on-year decline in sales of FAW Jiefang is mainly due to the impact of the Jilin epidemic on the company's production and sales.

With the improvement of industry fundamentals and various stable growth policies, the heavy truck industry is expected to gradually recover.

The highway truck traffic volume announced by the Ministry of Transport shows that the daily average truck traffic volume from June 1st to 4th was about 6.3 million vehicles,+20% compared to the same period in May. The current freight demand has significantly recovered. The central and local governments at all levels have recently emphasized the importance of stable growth, and it is expected that infrastructure growth will become an important source of contribution to macroeconomic countercyclical regulation. According to the prediction of the macro group of CITIC Securities Research Department, the annual growth rate of infrastructure investment is expected to achieve a growth rate of over 10%, which is expected to form a good driving force for the demand for various heavy trucks. In addition, the State Council of China has requested that the 90 billion yuan commercial truck loan issued by central enterprises of automobiles be postponed for six months through the cooperation of banks and enterprises, which is expected to significantly reduce the cash flow pressure on truck drivers and related enterprises, and promote the gradual recovery of the industry.

The penetration rate of new energy, the ASP of leading enterprises, and the increase in market share are expected to remain long-term investment opportunities for the industry.

Against the backdrop of 'carbon peaking and carbon neutrality', the penetration rate of new energy heavy trucks (such as power exchange and fuel cells) is expected to gradually penetrate from specific scenarios such as large enterprises, ports, and parks. With the support of factors such as the 'National VI' emission upgrade, stricter safety regulations, and increased user comfort requirements, the high-end trend of heavy trucks and engines is significant, and the average unit price and profitability are expected to gradually improve. With the gradual increase in the quantity of 'National VI' products, the scale effect of the industrial chain is expected to emerge, and the gross profit margin may gradually recover. Coupled with the increase in the unit price of 'National VI' products, the net profit of a single car (or single engine) is expected to be higher than in the era of 'National V'. The difficulty of emission technology during the 'National VI' period is high, with higher requirements for the reliability, stability, lifespan, and after-sales service of vehicles and engines. Leading enterprises have deep technological accumulation and complete service layout, and are expected to gain higher market share in the 'National VI' era. The competitive landscape is expected to further optimize.

Risk factors:

The downward pressure on macroeconomic growth continues; Low logistics freight rates; The growth rate of infrastructure investment is lower than expected; Slow inventory digestion; Natural gas prices fluctuate significantly.

Investment strategy.

We predict that the sales volume of the heavy-duty truck industry will be approximately 900000 vehicles in 2022, with H2 industry sales expected to be around+50% year-on-year. We believe that the current situation is a clear bottom for the heavy truck industry. With the support of favorable factors such as stable growth policies, infrastructure stimulus, and logistics recovery, the sales volume of the heavy truck industry is expected to reach a clear turning point in the second half of the year. The current situation is an ideal allocation opportunity for the heavy truck industry. Considering that companies with light financial assets may benefit relatively more in this cycle, we continue to recommend China National Heavy Duty Truck (A), which has steadily increased its market share; Weifu High Tech, the invisible champion of high-pressure common rail and the rapidly developing new energy business; China National Heavy Duty Truck (H), which has increased its high-end vehicle volume and AMT penetration rate; CIMC vehicles benefiting from the increase in market share of semi trailers and the growth in demand in the US market; It is recommended to pay attention to Weichai Power, which has a stable position in the engine industry and a leading layout in new energy, FAW Jiefang, which has a leading layout in intelligent networking, and Foton Motors, which has a leading AMT technology.