Description of the event
The company announced bus sales for May 2024. Yutong sold 3,483 buses in May, +11.2% year-on-year and -24.2% month-on-month, of which 3073 large and medium buses were sold, +11.1% year-on-year and -25.7% month-on-month.
Incident comments
Exports continued to be booming, exports of new energy sources increased, sales continued to increase year-on-year in May, and the domestic market declined slightly due to the pace of order delivery. Yutong sold 3,483 buses in May, +11.2% YoY and -24.2% YoY, of which 3073 large and medium buses were sold, +11.1% YoY and -25.7%, with exports and new energy exports increasing year-on-month; a total of 15,812 buses were sold in January-May, +51.9% YoY, and 14,174 large and medium passenger vehicles, +62.4% YoY. Exports continued to be strong in May, and large orders continued to land. In terms of energy, Greece exported 250 pure electric buses; the domestic sector declined due to short-term factors such as “May 1st” and delays in delivery of some orders until June. Looking forward to June, which is about to enter the peak month of domestic summer travel procurement, and domestic demand continues to rise. In terms of industry, the large and medium passenger industry sold 30,926 vehicles from January to 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.
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 recovered, 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 will reach 26.7% from January to April 2024.
The batch operation broke the 900,000-kilometer driving record. Yutong New Energy Bus reached another major milestone, and export orders continued to land.
A batch of Yutong pure electric buses traveling between Huizhou and Shenzhen in Guangdong achieved trouble-free operation of 900,000 kilometers. Excellent quality set a historical record for the longest operating mileage of pure electric buses in China. In terms of exports, 250 Yutong pure electric buses were exported to Greece. The first batch was put into operation in May, and all are expected to be on the road by the end of June; Yutong has achieved the largest export volume of 46 new energy airport shuttles from China and delivered to Spain. Airport shuttle products have covered more than 30 overseas countries and regions in Europe, the Middle East, Central Asia, Africa, and South America and achieved continuous operation, with over 100 in Europe.
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 18.7X, 15.3X, 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.