We believe that the heavy-duty truck industry will have trading opportunities in the coming quarter. It is expected that the continued high sales volume in the second quarter and the strong growth of listed companies will become catalysts for the upward movement of the stock prices of related companies.
Sales exceeded expectations
In the first quarter of 2010, the sales of heavy trucks increased by 166,000 units year-on-year, which contributed 82.2% of the previous year's forecasted increase (202,000 vehicles). Looking forward, April and May are still the traditional peak season for heavy trucks. Sales volume is still expected to remain high. Therefore, as long as there is no significant year-on-year decline in the second half of the year, heavy truck sales are more likely to exceed market expectations. Therefore, we revise up our 2010 sales forecast to 838,000 vehicles, which represents a year-on-year growth of 31%, which is higher than the market's expected 10%-15%.
From the perspective of supply and demand, the strong growth of logistics vehicles has provided good sales support for the heavy truck industry. At present, engineering-related heavy trucks account for only 40% of sales, while logistics vehicles account for 50% of sales.
In addition, since 2003, China’s medium- and heavy-duty truck industry has ushered in its first peak of growth. According to the 6-8 years service life of medium- and heavy-duty trucks, the first batch of heavy-duty truck products gradually ushered in the replacement period due to poor fuel economy and product aging. To help increase sales of heavy trucks in 2010 and beyond. There is more room for improvement in demand in the central and western provinces.
With the development of economy, the demand for road freight transportation and the quantity of heavy-duty trucks in many inland provinces, mainly road transport and railway transportation, have ample room for improvement.
The long-term drivers of heavy truck sales growth still exist. The main reason is: 1. Investment in fixed assets will continue to grow faster; 2. Logistics demand is still in the rising channel; 3. Long-term growth of exports can be expected. It is expected that the industry growth rate will remain at the level of 10% to 15% in the next 3-5 years.
Will not repeat the tragedy of 2008
We believe that the heavy-duty truck industry will repeat the 2008 “volume (sales) price†with little chance of deviating from this situation.
The current economy is in a clear upward phase of recovery. This round of sales growth has demand support (such as Midwest, logistics, etc.), which is more persistent than the one-time factor of the 2008 State III switch.
In addition, corporate conduction costs are increasing. The current capacity utilization rate of the industry is as high as 132.9%, and it will remain 100% or more throughout the year. Steel accounts for only 10% to 15% of the cost of heavy trucks. For static analysis, the steel price rises by 10%, and the gross margin of heavy truck manufacturers is squeezed by 1-1.5%. We believe that the level of gross margin of China's heavy truck manufacturers is expected to maintain or even show a structural upward trend in 2010. The reason is: In the first quarter of 2010, manufacturers increased their prices by 1.5%, coupled with the economies of scale brought about by the increase in capacity utilization and product upgrades.
Emissions upgrading and transportation economy promote product structure improvement, barriers to entry have gradually increased, and industry concentration has steadily increased. The leading companies will continue to benefit from the increase in bargaining power brought about by the increase in industry concentration and the increase in profitability after the increase in product prices.
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