Yesterday, the government issued some opinions on improving the system and mechanism of promoting consumption and further stimulating the consumption potential of residents, which proposed to promote the optimization and upgrading of automobile consumption, encourage and guide rural residents to increase automobile consumption, and so on. Under the influence of the policy, automobile stocks rose sharply today.

The following are some of the targets of the Hong Kong stock market. Geely Automobile and Great Wall Motor, who recently made a sharp correction, rose nearly 10%. Sinotruk soared by more than 20% mainly due to a planned joint venture with Traton, a branch of Volkswagen trucks, to produce MAN trucks.

Source: Futuo Niuniu

The background of this policy

The purpose of this policy is obviously to stimulate the consumption potential of residents.

Car sales have turned negative since July and August this year, and there are many reasons for the analysis, including the increase in car ownership per capita, residents' pessimistic expectations for income growth, and the adjustment of tariffs on imported cars. These factors have led to the low point of demand in recent years. According to the research data of Tianfeng Securities, the sales of the promotion activities of Chengdu Auto Show are relatively low recently.

Due to the depressed demand side, the industry is currently in the stage of destocking. According to the China report data, the inventory book value of six Hong Kong-listed passenger car manufacturers, including Geely and the Great Wall, increased by 19.4% to 54.76 billion yuan in the first half of the year compared with the same period last year.

In addition, even if Geely, which currently sells well, and Great Wall, which adjusted inventory levels last year, the current inventory turnover is on a downward trend.

To sum up, the background of this automobile consumption stimulus policy is that both supply and demand are in a less ideal stage.

Current position of automobile plate

Due to the depressed demand suppressing the supply side, coupled with the impact of stock ratio and tariff policy changes, automobile stocks have fallen sharply this year, and the industry has adjusted back nearly 30%. At present, the sector is valued at 9.8 times, at a nearly three-year low.

Source: Wande

In terms of individual stocks, even though Geely's sales increased by 40% from January to August this year and its performance grew by more than 50% in the first half of this year, its share price fell back nearly 50%.

Great Wall's performance last year was from a low base, and there is no surprise that there will be significant recovery growth this year (18H1's performance will increase by 50%), but the share price was once close to HK $4 a few days ago. Perhaps Chairman Wei Jianjun also felt that this position was really cheap, so he bought 13.3 million H shares of the company on the 17th.

How to look at this policy stimulus

In fact, yesterday's policy is like a statement, because it is not yet seen that there will be a clear stimulus measures to be launched, so this is not materially good for the industry.

However, as mentioned earlier, although the industry is weak, there are still some car companies with outstanding operating performance, especially considering the current low valuations, such as Geely Automobile, Great Wall Motor, Fuyao Glass Industry Group and SAIC are all deterministic opportunities under the division of the industry. Due to the mature development of the European and American automobile market, the performance of Toyota, Volkswagen and other multinational automobile enterprises has basically stopped growing, and the valuation is generally between 6-8 times. On the contrary, the domestic market will be faster than Europe and the United States for a long period of time, considering the growth and current position of the local automobile industry, even if the current market, the value rate is still very high.

In addition, assuming that the country is very determined to stimulate car sales this time, and then introduce specific measures, then how will the industry change?

In recent years, the auto industry has experienced two destocking times, namely, the consumption downturn caused by the economic crisis in 2008 and 2015, and finally this year. On the previous two occasions, the state has introduced relevant stimulus policies to boost consumption. Specifically, during the period from October 1, 2009 and October 1, 2015 to December 31, 2016, the state introduced a preferential policy to halve the purchase tax for small-engine passenger cars with 1.6L and less.

The effect of the policy stimulus is very good, with the industry growing by 52% in 2009 and 14% in 2016, and the automobile sector also rose sharply in 16 and 17 years.

Source of data: Federation of passengers

As the preferential policy of purchase tax was withdrawn at the beginning of this year, there is little chance of a new policy. But if there is, there's nothing to say, Suha! (Wen / Lin Xieyang)