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Our basic view of the heavy truck industry in the future is that the demand for heavy trucks will enter a steady growth phase, and the industry growth rate is expected to be between 10-15%. We propose to purchase G heavy trucks and pay attention to the integration process between Weichai Power and Hunan Torch.
Heavy truck industry growth rate between 10-15%
We believe that the factors that affect the sales volume of heavy trucks mainly consist of such factors as road freight volume, investment in fixed assets, highway network construction, truck ownership, and policies. In an ideal state, when the above variables are all kept unchanged, the sales volume of heavy trucks will not change every year, which equals the annual update demand. Only when one or more variables fluctuate significantly, the sales of heavy trucks will increase or decrease.
According to the statistics of the Ministry of Communications, China has 6,048,200 various types of trucks, of which 1,906,500 are large-scale ordinary trucks. According to statistics from the Auto Industry Association, between 2001 and 2005, China produced a total of 6,616,700 trucks of all kinds. Among them, 2.206 million heavy-duty trucks. If the statistics of the Ministry of Communications are correct, the quantity of trucks in China is equivalent to the number of trucks in the past five years. The average five-year renewal period of trucks is basically in line with what we learned from freight companies in actual surveys.
The annual average compound annual growth rate of trucks in the past five years was 4.47%, which was basically the same as the growth rate of 5.25% of freight, while fixed-asset investment grew at an annual rate of 25.4%. Under such a macroscopic environment, the annual compound annual growth rate of China's truck sales in the past five years was 14.4%.
From the above analysis, we can draw three conclusions: First, China's existing road freight supply and demand are in a relatively balanced state, and cargo volume and capacity are not the main reasons for the significant increase in truck sales. If the volume of freight traffic and road network construction are both growing steadily, the transportation capacity of ordinary trucks will also grow moderately; second, the rapid growth of truck sales will come mainly from the rapid growth of fixed asset investment; According to the calculation of the number of holdings and the average five-year update period, the annual demand for trucks is about 1.21 million. Among them, the demand for renewal of medium- and heavy-duty trucks was about 381,300. The demand for upgrading was another major factor in the growth of truck sales.
Our basic view of the heavy truck industry in the future is that the demand for heavy trucks will enter a stage of steady growth, and the industry growth rate is expected to be between 10-15%: the increase in cargo and road mileage will be stable, so the sales volume of ordinary trucks will also grow steadily. . According to the forecast of China Gold macro team, the growth rate of fixed asset investment in 2007 will be lower than that in 2006, and the possibility of heavy truck demand growth will be smaller again; governance overload, weight and toll, oil prices and industrial policies are not affecting demand. Deterministic factors.
Industry competition dust has not settled
Heavy trucks as a means of production are closely related to the macro economy. As the growth rate of investment in fixed assets in China has been maintained at a relatively high level, coupled with the fact that the heavy truck industry's annual capacity of 250,000 to 300,000 vehicles is far greater than that of large and medium-sized bus industries, the heavy truck market has always been the most attractive segment of the commercial vehicle industry. The battlefield of major auto groups.
We believe that with the integration of Weichai Power and Shaanxi Heavy Duty Truck, SAIC Motor Group’s reorganization of Chongqing Hongyan, FAW and Dongfeng’s efforts to increase new products, and the efforts of Northern Mercedes-Benz and Beiqi Futian to catch up, the competitive landscape of China’s heavy truck industry is There will be great uncertainty in 2007.
Since 2006, heavy-duty heavy trucks have become mainstream, Steyr family has become the leader in the heavy-duty truck industry, and Sinopec, Shaanxi Heavy Duty Truck, Chongqing Hongyan and Beiqi Foton sales rose by 43.4 in January and August respectively. %, 84.3%, 33.0% and 60.2%, the total market share of the four companies was 47.3%, accounting for almost half of the heavy truck industry. Due to the high degree of mechanization of heavy trucks on the Steyr platform, which is very suitable for the needs of domestic construction machinery users, coupled with its convenient maintenance and strong bearing capacity, we believe that the life cycle of the platform products will continue. After four companies have updated their cabs, they will continue to be the backbone of domestic heavy trucks for quite some time to come.
After determining that Steyr products will continue to dominate, we believe that the judgment of the competitive landscape will turn into two problems: First, how the cake of the entire market is divided between Steyr heavy trucks and other heavy trucks; How do four companies within the Terre family split the inventory?
FAW and Dongfeng are the representatives of the Feister heavy trucks. FAW Aowei and Dongfeng Tianlong are new products launched by the two companies after the heavy truck demand upgrade. They are not ideal from the perspective of the market. Dongfeng Tianlong has been unable to get users' approval because of high fuel consumption since it was listed. FAW Aowei has a gap with Steyr heavy trucks in terms of dynamics. However, with the increase in R&D and marketing efforts of the two companies, it is expected that the Steyr heavy trucks will form an impact in 2007.
In the Steyr family, the same changes have taken place: Weichai Power is about to integrate Shaanxi Heavy Duty Truck, and SAIC reorganizes Chongqing Hongyan. It is difficult to judge whether China Heavy-Duty Truck can maintain its leading position. Therefore, after 2007, the heavy-duty truck industry has a relatively large competitive landscape. Uncertainty is likely to come from behind, such as Shaanxi Zhongqi, North Mercedes-Benz and Chongqing Hongyan.
G Heavy Truck (000951) With the launch of Weichai Power's plan to return to the A-share market through the exchange of shares with Hunan Torch A, the perfect combination of “Weichai Engine + Shaanxi Heavy Duty Truck + Fast Transmission + Hande Axle†is immediately available. Infinite imagination of the capital market. While optimistic about this integration, we believe that GCG is still one of the most technologically strong companies in the domestic heavy truck industry. As long as it can successfully establish the engine foundation for market trust, the company’s continued growth can be expected. However, considering the current investment in R&D and the reaction of the market to heavy-duty engines, this is only a matter of time. Based on the 13x P/E ratio and the 2007 Bridgebox consolidated statement of EPS1.165, the company's target price for the next 6-12 months is 15.15 yuan. We still maintain the “buy†recommendation.
Heavy truck industry is out of the trough