A leading car company that has been deeply involved in the bus market for decades and is leading the development of buses in China. Since its establishment in the 1960s, Yutong Bus has always focused on the bus business. The product matrix is rich and has covered all market segments. As a high-quality private company, the company dares to innovate itself and transform into corporate culture and brand heritage, adhere to R&D and innovation, forward-looking layout of new energy and overseas markets, and seize low-carbon development opportunities in the global public mobility sector. In 2023, the company achieved sales of 37,000 buses, with sales volume of 26,000 units in China, up 7% year on year. The export sales volume was 10,000 units, up 79% year on year; export sales volume was 10,000 units, up 79% year on year, taking the lead in achieving a breakthrough in high-end markets such as Europe, participating in global market competition, competing on the same stage with leading overseas bus companies, accounting for nearly 1/4 of China's bus export share, continuing to lead the development of China's bus industry.
China's bus exports have begun a new stage of high growth, and Yutong has taken the lead in breaking through the European high-end market. In 2023, China's Zhongda Bus exported 35,000 vehicles, with a year-on-year increase of 73%. The CAGR reached 29% in 2020-23, becoming the main driving force for the industry's growth. This was mainly due to the recovery in overseas bus demand and leading Chinese car companies represented by Yutong, which achieved accelerated share breakthroughs with short delivery cycles and high product quality, and successfully entered the European market based on the accumulation of new energy products and domestic industrial chain support. In 2023, China exported more than 0.16 million new energy buses to Europe, an increase of 49% over the previous year. The overall average export price to Europe was 1.72 million yuan. Since 2024, it has continued to show a rapid growth trend, and the average export price to Europe has risen to 200+ million yuan. Yutong has a forward-looking layout in the European market. It has developed strong competitiveness in the Nordic market and continues to expand to other regions of Europe. In 2023, it registered nearly 500 new energy buses in the EU, contributing to a significant increase in the company's profit.
Since listing, dividends have continued to be stable, and the high increase in export cash flow has helped the high proportion of dividends continue. While the overseas business continues to grow, the company also pays more attention to cash flow control. Through reasonable control of the corresponding collection period and inventory reserves, cash flow from operating activities continued to flow in. In 2023, the company's cash in hand rose to 6.4 billion yuan and free cash flow reached 2.05 billion yuan. As the industry enters a mature development stage, the company also reduced its capital expenditure accordingly. In 2023, it was only 570 million yuan, and its share of revenue shrunk to 2%. Currently, the company has plenty of manual production capacity, and future capital expenditure is expected to remain low. Thanks to excellent profit returns, the company has continued to provide shareholder returns since its listing. The excess dividend was 3.32 billion yuan in 2023, and the cumulative dividend reached 22.7 billion yuan, which has greatly exceeded the total amount of capital raised since listing. As the export business continues to drive profits, the company is expected to maintain a high percentage of dividends.
Profit forecast and valuation: Benefiting from continued high growth in NEV exports and falling raw material costs, the company's net profit is expected to reach 3.2 billion/ 3.9 billion/ 4.7 billion yuan in 2024-2026, up 76%/21% year-on-year. The current market value corresponds to PE 18.2/15.0/12.4 times, respectively. Considering the company's obvious competitive advantage, high-profit orders continue to flow in, covered for the first time, giving a “buy” rating.
Risk warning: Industry demand falls short of expectations; fluctuating raw material prices; fluctuating exchange rates and shipping costs.