Description of the event
The company announced bus sales for April 2024. Yutong sold 4,598 buses in April, +62.1% year-on-year, +29.6% month-on-month, of which 4134 large and medium buses were sold, +65.6% year-on-year, and +31.0% month-on-month.
Incident comments
Benefiting from domestic and foreign resonance, sales continued to increase year-on-year in April, hitting a new high in April in the past five years. Yutong sold 4,598 buses in April, +62.1% year over month, of which 4134 large and medium buses were sold, +65.6% year over month, and +31.0% month on month; in January-April, a total of 12329 buses were sold, +69.5% year over year, and 11,101 large and medium passenger cars were sold, +86.3% year over year.
After a few years, the travel market continued to improve, demand for passenger cars was strong, exports continued to increase, and sales continued to grow in April. In terms of industry, the large and medium passenger industry sold 30,926 vehicles in January-April 2024, +65.3%; in terms of exports, in January-April, the export volume of large and medium passenger vehicles reached 13,172 vehicles, +57.4% year-on-year.
Reduced battery costs are compounded by scale effects, globalization+high-end increases profits, net profit margins continue to rise, and net operating cash flow has increased dramatically. The company's 2024Q1 gross profit margin was 24.8%, +3.4pct year over year, and -7.1pct month-on-month. In terms of cost ratio, the company's cost rate during the period was 13.8%, -7.3 pct year over year, and -0.1 pct month-on-month, and cost reduction and efficiency continued to be realized. On the profit side, the sharp increase in exports combined with strong profitability of overseas high-end models, and the performance greatly exceeded expectations. The company's Q1 net profit was 657 million yuan, +445.1% year over year; corresponding net profit margin of 9.9%, +6.6pct year on year, and +0.5pct month-on-month. The company's bicycle profit was 85,000 yuan, +58,000 yuan year-on-year, and +10,000 yuan month-on-month. The company's repayment cycle continued to shorten, compounded the 2023Q4 large accounts receivable. The net operating cash inflow of 2024Q1 reached 3.31 billion yuan, +703.9% over the same period last year, and cash flow continued to improve.
Economic recovery and competitive marketization have led to a rapid increase in share. Export+electrification highlights profits, and is expected to open up new growth space. The bus replacement cycle has arrived, demand for seated buses has been repaired, and the industry has bottomed out and rebounded. Under market-based competition, the market share continued to increase. From January to April 2024, Yutong had a market share of 35.9%, an increase of 4.0 pct over the previous year. At the same time, the company has global competitiveness in the field of bus electrification. Under the “Belt and Road” context, the company's overseas expansion is expected to contribute to additional growth. Yutong's export market share from January to April 2024 is about 26.7%.
Investment advice: Global bus leader, good long-term growth+continuous high dividend capacity, highlighting investment value. In the domestic market, seater buses continued to grow, the reshuffle accelerated in the post-subsidy era, and there was plenty of room to increase the share of new energy sources; in overseas markets, globalization+high-end strategies were promoted, and exports highlighted the level of profit; the reduction in battery costs combined with large-scale effects supported the continuous improvement of the company's performance. The company's capital expenditure has slowed, and sufficient cash flow guarantees high dividends. In 2023, the dividend was 1.5 yuan per share (tax included), with a total distribution of 3.32 billion, with a dividend rate of 182.8% and a dividend rate of 5.9%. The company's net profit for 2024-2026 is estimated to be 2,98 billion yuan, 36.4 billion yuan, and 4.35 billion yuan, respectively. Corresponding PE is 18.8X, 15.4X, and 12.9X, respectively, maintaining a “buy” rating.
Risk warning
1. Demand is lower than expected due to high macroeconomic pressure;
2. Overseas competition has intensified and profit margins have declined.