Incident: The company released its 2023 performance forecast. The profit attributable to the company's owners is expected to increase 200%-240% year-on-year for the whole year, reaching the level of 50.1-5.68 billion yuan. The performance is quite impressive.
The industry is recovering clearly, and export performance has exceeded expectations. According to data from the China Automobile Association, sales of heavy trucks reached 911,000 units in 23, +35.6% compared with the same period last year, and the industry is recovering clearly. In terms of exports, according to statistics from the General Administration of Customs, 295,000 heavy trucks were exported throughout the year, +79.3% over the same period last year. In addition, due to sustainability factors such as increased oil and gas price differentials and sufficient gas sources, the heavy gas truck market exploded. In 23, the industry sold 152,000 vehicles, +307% over the same period last year.
Looking at the whole year, exports and natural gas became important growth points. The total increase in the industry in '23 was about 240,000 vehicles, and exports/heavy gas trucks contributed about 13/110,000 vehicles, accounting for 54%/46% of the industry increase respectively. We expect the heavy truck industry will maintain its recovery trend, with heavy truck sales reaching the level of 10.5 to 1.2 million vehicles in 24-25, based on market segmentation opportunities and overseas market support, and domestic demand improvements brought about by the gradual implementation of domestic trillion debt projects.
The segment performed well, and the improved product structure was beneficial to profit growth. The Group's sales volume continued to grow rapidly in '23, with cumulative sales of 234,000 vehicles, +47.5% year-on-year, with a market share of 25.7% and exports exceeding 130,000 vehicles. In terms of segmentation, China Auto News shows that Sinotruk is in a leading position in several market segments, with market shares of 26.6%, 26.8%, 52.1%, 30%, 25.5%, 26.2%, 28.7%, 35.2%, and 26.5% in the main line transportation, muck truck transportation, AMT, cold chain transportation, mixers, dangerous goods transportation, special wrecker vehicles, and 4x2 tractors, respectively. The Group's continued deep cultivation in market segments, compounded by an increase in the share of high-end heavy truck exports, is expected to drive steady growth in the company's profits.
The company issued an equity incentive plan to continue to consolidate its leading position. The company issued an equity incentive plan. The target revenue for 24/25/26 is not less than 948/1091/125.5 billion yuan, and the sales profit margin (total profit/operating income) is not less than 7.5%/8%/8.5%, respectively. This target corresponds to a total profit of 71.1/87.3/10.67 billion yuan. We believe that the release of this equity incentive plan shows the company's determination to continue to consolidate industry leaders, and the company's later performance is worth looking forward to in the context of the continuous recovery of the heavy truck industry.
Profit forecasting and investment advice. The company's net profit to mother is expected to be 53.4, 65.2, and 7.51 billion yuan respectively in 2023-2025. The compound annual growth rate of net profit for the next three years is 61.1%, corresponding to PE of 8, 7, and 6 times, maintaining a “buy” rating.
Risk warning: risk of industry recovery falling short of expectations; risk of exchange rate fluctuations; risk of unsustainable export sentiment; risk of fluctuating raw material prices; risk of capacity expansion falling short of expectations.