Main points of investment

Main points of announcement: when FAW Jiefang released its semi-annual report in 2023, 2023Q2 achieved operating income of 18.977 billion yuan, compared with the same month-on-month ratio, the net profit of Q2 was 340 million yuan, and the net profit after deducting non-return was 234 million yuan. Q2 gross profit margin was 8.24%. Compared with the same month, the Q2 performance exceeded our expectations.

The quantity and price of heavy cards in Q2 have risen, and the profitability has increased rapidly. 1) from the revenue point of view, the 2023Q2 heavy truck industry achieved cumulative wholesale sales of about 247000 vehicles, which were + 66.69% and 2.35% respectively compared with the same period last year. The sharp increase in the same period last year was mainly due to a low base. FAW liberated 2023Q2 to achieve wholesale sales of 73000 vehicles, compared with + 118.5% and 24.98%, which significantly outperformed the industry as a whole, mainly because the company focused on balanced development of various market segments and reshaped marketing capabilities, resulting in a substantial increase in sales.

2) from the point of view of gross profit margin, 2023Q2 gross profit margin is 8.24%. Compared with the same month, + 3.16/+2.11pct respectively, the increase in the same month is mainly due to the increase in the delivery scale of Q2, the increase in capacity utilization, the increase in the average price per car and the reduction in the price of raw materials and other raw materials in the upstream, cost reduction and other factors. The average price of Q2 bicycles increased to 259700 yuan, which is + 12.57% and 8.17% respectively compared with the same month. 3) expense rate: Q2 company sales / management / R & D expense rates are 2.21%, 2.52%, 3.92%,-0.32/-3.49/-2.55pct,-0.32/-0.29/+0.33pct, respectively. The company continues to strengthen cost control and improve efficiency, and sales / management expenses are lower than the previous month. 4) 2023Q2's parent net interest rate is 1.79%, which is + 5.44/+1.35pct respectively compared with the same month. The increase in volume and price drives the rapid realization of profitability.

Consolidate and increase the market share of the domestic market, accelerate the distribution of overseas exports, and is expected to maintain sustained high growth.

For the whole of 2023, we expect the wholesale sales of heavy truck industry to reach 880000 vehicles, of which 27.61 million vehicles are exported (China Automobile Association) / domestic, respectively, which are + 55% and 29% respectively compared with the same period last year. FAW liberated the domestic market share is stable, the global strategic layout is accelerating, leading to the overall sales and profit growth.

In terms of marketing and procurement, Jiefang has more than 900 dealers, the marketing network covers more than 260 prefecture-level cities across the country, the coverage of cities with a capacity of more than 1000 is 99%, and the national average service radius is 48 km. The company's products are exported to 80 countries and regions, including Southeast Asia, the Middle East and Latin America, and there are nearly 80 first-class dealers and nearly 300 distributors in nearly 40 countries and regions around the world, helping the company's overseas layout.

Profit forecast and investment rating: we maintain the company's total operating income of RMB 51.777 billion in 2025, and the net profit belonging to the parent company is RMB 16.54, 3537, and 4.667 billion, respectively, compared with the same period last year. The corresponding EPS is 0.36, 0.7610, 1.01 yuan, and the corresponding PE is 24-11-9, maintaining the "Buy" rating.

Risk hints: the recovery of the heavy truck industry is less than expected; overseas exports fluctuate more than expected; and raw material prices fluctuate sharply.