According to Zhittong Finance APP, Huatai Securities released a research report stating that from January to May 2024, China's passenger car market had a mild recovery, with cumulative sales of 9.659 million vehicles, up 7.3% year-on-year, and cumulative zero sales of 8.153 million vehicles, up 5.3% year-on-year. As the car market enters the half-year finale period and with the greater potential for used car replacement, the future car consumption market may continue to rise. Specific automakers' sales volume from January to May increased as follows year-on-year: BYD/Idea/NIO/Qoros/Changan/Chery/Geely/Great Wall/Tesla China increased by 27%/33%/56%/599%/9%/55%/42%/17%/-7%, respectively. The performance of auto parts companies followed the recovery of the terminal car market. Qoros, Ideal, and a few leading independent brands with strong vehicle model cycles and monthly deliveries are expected to outperform the industry, and their related auto parts enterprise's Q2 performance may have greater elasticity.
Here are the main points of HuaTai Securities:
Passenger cars: From January to May, the car market had a mild recovery, and the pattern showed increased differentiation.
From January to May, the car market experienced a weak recovery. After the price war at the beginning of the year, consumers waited and observed. After the relevant policy details were clarified at the end of April, market sentiment improved, and the decline in zero sales narrowed. In terms of exports, there was a decline at the beginning of the year due to blocked shipping and the Spring Festival. Later, it gradually warmed up, and the export volume from January to May increased by 32% year-on-year to 194,000 vehicles. In terms of performance, the effect of the policy of replacing old cars with new ones was evident, and combined with different OEMs' vehicle model cycles, Q2 performance is expected to show differentiation. (1) Year-on-year growth: BYD's net profit is expected to be between 8.5 billion and 9.5 billion yuan, a year-on-year increase of 25% to 39%. Ideal's net profit is expected to be between 1 billion and 2 billion yuan, a year-on-year increase of 69% to 237%. Great Wall's net profit is expected to be between 3 billion and 3.5 billion yuan, a year-on-year increase of 153% to 195%. Changan's net profit is expected to be between 1 billion and 1.5 billion yuan, a year-on-year increase of 46% to 120%. Geely Auto expects its Q2 net profit to be between 1.3 billion and 1.8 billion yuan, a year-on-year increase of 35% to 87%. (2) Year-on-year decrease: Xiaopeng Motors is expected to lose between 200 million and 150 million yuan, and the loss will widen year-on-year.
Auto parts: Strong vehicle model cycles and increased overseas business volume realization led to widespread year-on-year growth in performance.
From January to May, sales of Ideal/Qoros/Changan/Chery/Geely/Great Wall increased year-on-year. Coupled with the continuous realization of increased overseas business volume by auto parts companies, the sector experienced strong year-on-year growth. The specific Q2 expectations are as follows: (1) Net profit growth rate year-on-year will be approximately 50% or more: Optimus Prime 72-89 million yuan, a year-on-year increase of 555% to 709%. Keboda Technology's net profit is expected to be between 230 million yuan and 250 million yuan, a year-on-year increase of 60% to 74%. Huizhou Desai SV Automotive's net profit is expected to be between 290 million yuan and 430 million yuan, a year-on-year increase of 41% to 55%. (2) Year-on-year growth rate of 0-50%: Bethel Automotive Safety Systems' net profit is expected to be between 240 million and 270 million yuan, a year-on-year increase of 31% to 47%. China National Industrial Group's net profit is expected to be between 350 million and 380 million yuan, a year-on-year increase of 30% to 41%. Twin Disc's net profit is expected to be between 240 million and 260 million yuan, a year-on-year increase of 21% to 29%. Daimay's net profit is expected to be between 210 million and 230 million yuan, a year-on-year increase of 8% to 19%. Xingyu's net profit is expected to be between 300 million and 330 million yuan, a year-on-year increase of 8% to 14%. Topu's net profit is expected to be between 700 million yuan and 750 million yuan, a year-on-year increase of 9% to 16%.
Commercial vehicles: Weak recovery in domestic sales, and exports are a core driving force for total volume growth.
From January to May 2024, China's commercial vehicle market maintained year-on-year growth: heavy truck sales increased by 9% year-on-year to 438,000 vehicles, and exports increased by 13% year-on-year to 127,800 vehicles. Sales of domestic fuel heavy-duty trucks experience weak recovery, exports and LNG heavy-duty trucks are thriving. Sales of large and medium-sized passenger vehicles increased like-for-like to 40,000 vehicles, a year-on-year increase of 57% / exports increased year-on-year to 17,000 vehicles, a year-on-year increase of 54%. During the same period, the weak basic number continued for local brands to continuously win large export orders, providing a strong boost for the sector's same year-over-year growth. Specific performance is as follows: (1) Sino Truck has a stable leading position, and its sales growth rate may outperform the industry. It is expected that Q2 net profit will be between 265 million and 280 million yuan, a year-on-year decrease of 3% to 2%. (2) Foton Motor's commercial vehicle business layout is diverse, and it is expected that Q2 net profit will be between 260 million and 280 million yuan, a year-on-year decrease of 16% to 9%.
Motorcycles: Domestic products use their cost-performance advantage to address the expansion of overseas demands, and exports have a strong momentum.
Changes in consumer concepts and the growth in commuting demands driving an expansion in overseas motorcycle demand. At the same time, the European/Middle Eastern/South American markets value cost-performance more, and Chinese automakers' brand-building and product iteration over many years have enabled their performance to match that of overseas leading companies. Under obvious price advantages, local leading companies continue to capture market share. From January to May, exports of large-displacement motorcycles increase sharply year-on-year by 67%, with strong export momentum driving growth in domestic fuel motorcycles. From January to May, the total sales of large-displacement motorcycles increased year-on-year by 24%, to 264,000 units. It is expected that CFMoto Power's Q2 net profit will be between RMB 4.1 billion and RMB 4.4 billion, a year-on-year increase of 20% to 30%.
Risk warning: Improvement in terminal demand is less than expected; export business growth rate slows down; policy strength is less than expected.