Industry prosperity is picking up at an accelerated pace, and the company's performance has increased. In the first three quarters of 2023, the company achieved revenue of 48.123 billion yuan, +58.01% year-on-year; net profit of 412 million yuan, +163.21% of the same period; net profit after deducting 85 million yuan, +107.96% year-on-year. Among them, Q3 achieved revenue of 15.108 billion yuan, +99.23% year-on-year, and net profit of 1.0704 million yuan, +101.35% year-on-year. The company's performance increased significantly, mainly benefiting from the recovery of domestic and foreign markets. According to data from the China Automobile Association, in January-September 2023, China's heavy truck sales volume was 707,000 units, +35% year-on-year, of which the export volume was 94,000 units, +49% year-on-year. The sales volume of heavy trucks in September was 80,000 units, +55%/+12% yoy. The company sold 143,200 heavy trucks in January-September, with a market share of 20.25%, +44.55% over the same period; in September, the heavy truck sales volume was 19,400 units, with a market share of 24.24%. As domestic and foreign economies recover, industry sentiment will continue to rise, and the company's performance is expected to continue to grow steadily.

Seize opportunities for heavy natural gas trucks and accelerate the expansion of the new energy track. Since 2023, demand for heavy natural gas trucks has soared due to the continued expansion of oil and gas price spreads. From January to September of this year, domestic heavy natural gas trucks sold a total of 107,400 vehicles, an increase of 255% over the previous year. The company grasped market opportunities and launched a series of heavy natural gas truck products, which are favored by the market. In September, the company sold 8,500 heavy natural gas trucks per month, with a market share of 35.2%, ranking first in sales for heavy natural gas trucks. In the field of new energy, since announcing the “15333” new energy strategy, the company has carried out comprehensive development of vehicle and assembly products and core technology reserves for the three technology routes (pure electricity, hybrid, and fuel power), five major vehicle platforms, and made every effort to explore the new energy circuit. There is a clear positive trend for heavy gas trucks in the industry. The company is seizing the opportunity to sell big, and at the same time continuously accelerates the development of the new energy circuit. The market share is expected to expand further in the future.

The transformation of the new four modernizations has achieved remarkable results. Jointly with Huawei, we are empowering the digital transformation. In the context of the new four-phase transformation trend of the heavy truck industry, the company has a comprehensive layout in the field of intelligence, focusing on the four major scenarios of “main lines, ports, sanitation, and ports”, leveraging the advantages of the product portfolio to achieve the implementation of the three operating models of “sales+operation, operation contracting, and intelligent driving+finance”. In October 2023, the company and Huawei signed a memorandum of understanding on comprehensive and deepening cooperation. The two sides will jointly build a major model for the commercial vehicle industry. While empowering the liberalization of internal applications, they will also gradually export intelligent solutions and carry out in-depth cooperation in areas such as intelligent driving. With the support of this cooperation, the company is expected to seize opportunities in the field of industry digitalization.

[Investment advice]

In the short term, demand for commercial vehicles recovered after the epidemic improved, and the company and dealers jointly developed the terminal market, and is expected to catch up rapidly in performance in 2023; in the medium to long term, the company is actively developing new energy, intelligence, and exports, and is optimistic about the company's future transformation. We maintain our projected 2023-2025 revenue of 457.15, 620.64 and 79.231 billion yuan respectively, net profit of 6.03, 8.62 and 1,324 billion yuan respectively, corresponding EPS of 0.13, 0.19 and 0.29 yuan, and PE of 71, 50 and 32 times respectively, maintaining the “increased holdings” rating.

[Risk Reminder]

Economic recovery fell short of expectations

Demand growth in the heavy truck industry fell short of expectations

The penetration rate of natural gas and new energy heavy trucks fell short of expectations