Incidents:
On June 5, 2024, Yutong Bus released production and sales data for May 2024: the company achieved 3,665 bus production in May 2024, +1.36% year over year, achieving 3,483 bus sales, +11.17% year over year, including 3073 large and medium-sized buses, +11.1% year over year.
Investment highlights:
May sales declined seasonally, in line with our expectations. In May 2024, the company achieved 3,483 bus sales, +11.2% year-on-year and -24.2% month-on-month. Among them, sales of large, medium and light buses were 2152/921/410 units respectively, +38.5%/-24.1%/+12%, and -15.6%/-41.9%/-11.6% month-on-month. The month-on-month decline in sales volume in May was greatly affected by the decline in sales of medium-sized buses. We think it was mainly due to the high early impulse base of the domestic bus market in April before the “May 1st” peak tourist season, and domestic sales declined seasonally in May.
The company's export performance in May is expected to remain impressive, and orders for new energy exports to Europe will be delivered one after another.
In May 2024, Yutong exported another batch of 46 high-end airport shuttles to Spain and will be put into normal operation at 15 major local airports, including 25 pure electric airport shuttles. Additionally, 250 electric buses supplied by Yutong to Greece will soon arrive in Greece. The first batch of 46 has already been delivered in Athens and Thessaloniki, and all 250 electric buses are expected to hit the road by the end of June. 2024Q1, the number of new European bus registrations was +26.8% year-on-year, and the number of electric bus registrations was +7.6%. We expect the growing trend of demand for European 2024Q1 buses and new energy buses to continue throughout 2024, and Yutong is expected to further expand the European bus market and the new energy market.
Profit forecasting and investment rating companies are leading domestic bus companies. In the future, demand in the overseas bus industry, especially demand for new energy buses, will continue to grow. At the same time, domestic bus sales are expected to continue to rise, driving the company's total sales volume and structure to continue to improve. We have adjusted the company's profit forecast. The company is expected to achieve operating revenue of 329.54, 381.70, and 41.945 billion yuan in 2024-2026, with year-on-year growth rates of 22%, 16%, and 10%; achieved net profit to mother of 30.34, 36.59, and 4.038 billion yuan. The growth rate is 67%, 21%, and 10%; EPS is 1.37, 1.65, and 1.82 yuan, and PE valuations corresponding to the current stock price are 18, 15, and 14 times, respectively, maintaining the “gain” rating.
Risks suggest that demand recovery in the overseas bus market fell short of expectations; demand growth in the domestic bus market fell short of expectations; price increases of upstream raw materials exceeded expectations; and the risk of changes in export policies.