Key points of investment:
Incident: The company released its 2023 annual report. In 2023, the company achieved operating income of 42,070 billion yuan, +45.96% year over year; realized net profit of 1,080 billion yuan, +405.52% year over year; realized net profit without return to mother of 1,042 million yuan, +464.15% year over year. In the 2023Q4 single quarter, the company achieved revenue of 11.306 billion yuan, +77.57% year-on-year, and realized net profit of 425 million yuan, +396.60% year-on-year; realized net profit of 404 million yuan without return to mother, or 370.93% year-on-year.
The heavy truck industry continues to recover, and Sinotruk Group's market share continues to rise. Strong demand for heavy natural gas trucks combined with a rapid increase in exports, and the heavy truck industry continues to recover. According to China Automobile Association data, the cumulative sales volume of the heavy truck industry in 2023 was 911,000 vehicles, +35.6% over the same period last year. Driven by industry demand, Sinotruk Group sold 234,200 heavy trucks throughout the year, +47.5% year-on-year, and its market share increased 2.07 pcts to 25.71% year over year, ranking first in the industry. The market share of heavy natural gas trucks of the Sinotruk Group continues to rise. In 2023, the cumulative sales volume of heavy natural gas trucks was 26,900 units, with a market share of 17.7%. The cumulative sales volume of 2023Q1 heavy natural gas trucks was 0.38 million units, and the market share increased to 24.1%.
The volume and price of the company's vehicle business have risen sharply, and the scale effect has led to an improvement in gross margin. The company accelerated product upgrades and structural adjustments, and actively laid out market segments such as heavy natural gas trucks and exports, and the volume and price of the vehicle business rose sharply. The company's annual cumulative sales volume of heavy trucks was 128,000 units, +32.8% year on year. The vehicle business's annual sales revenue was 33.96 billion yuan, +50% year over year, and bicycle price was 266,000 yuan, +13% year over year. The company has benefited from the recovery in the heavy truck industry, and the scale effect has led to an increase in profit levels. In 2023, the company's overall gross margin/net margin was 7.85/ 3.40%, respectively, +1.67/+1.58pct year-on-year. Effective control on the cost side. The cost rate for the period was 2.69%, -0.5pct year-on-year. Among them, sales/management/R&D/finance expenses were 1.05/0.78/1.40/ -0.54%, respectively, and -0.06/-0.13/-0.1/-0.21pct, respectively.
Overseas market sales reached a record high, and domestic market segments continued to be deeply cultivated. Overseas markets continued to expand. The cumulative export sales volume of the heavy truck industry in 2023 was 276,000 vehicles, +58.1% year on year, and Sinotruk Group's annual export sales volume was 130,000 vehicles, +47% year-on-year, and the export volume reached a record high. In the domestic market, the company has comprehensively broken through key market segments, and the market share in various market segments has stabilized to rank first in the industry, such as tractors, the 13NG industry with the highest growth rate and the dangerous goods industry; in terms of trucks, customer recognition in express delivery and green transport segments is constantly increasing; in terms of mixers and dump trucks, it has the highest market share in the muck truck market; in terms of special vehicles, fire engines, pump trucks, television broadcasting, oil field operations and other fields continues to lead the industry. The new energy sector achieved full product coverage, and the three major technical routes of pure electric power, hybrid power, and hydrogen fuel cells were fully deployed. In 2023, Sinotruk Group led the growth rate of new energy heavy trucks. The cumulative sales volume for the whole year was 1981 vehicles, +180.7% over the same period last year, and the market share increased by 3 percentage points over the same period last year.
The heavy truck industry will continue to recover rapidly in 2024. In the short term, large oil and gas price differences will still benefit the continuous increase in the penetration rate of heavy natural gas trucks. Combined with the trade-in policy and the gradual implementation of the “National Four” policy, it will promote domestic demand recovery in the heavy truck industry. On the export side, overseas demand continues to be strong, and economic growth in emerging markets and developing countries will bring a steady increase in demand for commercial vehicles. With the restorative growth of domestic commercial vehicles, we expect total domestic heavy truck sales to reach 1.14 million units in 2024, +25% over the same period last year.
Maintain the company's “buy” investment rating. The company benefits from the upward cycle of the heavy truck industry, the gradual optimization of the product structure, the increase in the proportion of high-value-added products, and continuous refined cost-side management to support the improvement of the company's profit level. The company's net profit for 2024-2026 is estimated to be 1473/183/238.2 billion yuan, and the corresponding EPS is 1.25/1.61/2.03 yuan, respectively. Based on the closing price of 17.42 yuan/share on April 16, the corresponding PE valuation is 14.07/10.95/8.70 times, respectively, maintaining a “buy” investment rating.
Risk warning: Heavy truck industry recovery falls short of expectations, impact of rising raw material prices, overseas market expansion falls short of expectations