The Zhitong Finance App learned that CMB International released a research report stating that it reaffirms the positive view of Weichai Power (02338, purchase, industry first choice), mainly due to Weichai's dominant position in the natural gas engine field (market share > 60%). The bank is also optimistic about Sinotruk (03808, purchase), and the company's heavy gas truck sales are growing at an accelerated pace. Overall, in addition to the strong growth of heavy natural gas trucks, the bank still believes that: 1) the replacement cycle; 2) strong export demand will continue to be the main driver of the industry.

The report said that since the beginning of the year, the price of liquefied natural gas in China has fallen by 35% (due to sufficient supply) and the price of diesel has risen by 4% (due to strong crude oil prices), reducing the natural gas/diesel price ratio to only 0.56 times (0.9 times at the end of 2023). Driven by the widening price spread, heavy natural gas truck sales in March doubled sharply year on year, accounting for 25% of total heavy truck sales in March (only 7% in January). Given the rise in crude oil prices due to geopolitical tension in the Middle East, the bank anticipates that the current gas/diesel spread may last longer than in 2023.

The payback period for heavy natural gas trucks is about 2.5 years, while the payback period for diesel heavy trucks is about 3.8 years. The bank's payback period analysis shows that heavy natural gas trucks are more attractive than diesel heavy trucks. For truck buyers, based on the current prices of LNG (about 4.2 yuan/kg) and diesel (about 7.2 yuan/liter), the bank estimates that the net profit generated by an LNG heavy truck is about 186,000 yuan per year, which is far higher than this diesel heavy truck (about 99,000 yuan). Furthermore, according to the first commercial vehicle data, China's heavy gas truck sales increased 208% year-on-year to 29,300 units in March, accounting for 25% of total sales. Notably, the sales volume of heavy natural gas trucks of Sinotruk Group (Sinotruk's parent company) increased 7.7 times year-on-year in March, and its market share rose to 27% (only 10% in March 2023).