The Zhitong Finance App learned that Dongwu Securities released a research report saying that in the medium to long term, the triple factors of heavy gas trucks, elimination of national four, and project recovery resonate, and are firmly optimistic about the 2024-2025 upward cycle. Natural gas production capacity at home and abroad is abundant, domestic gas supply is abundant, and the penetration rate of heavy gas trucks is expected to increase further in 2024 due to multi-dimensional supply/demand/policy catalysis; in line with the elimination of national quadruple trucks and the catalytic drive of trillions of treasury bonds to repair engineering heavy truck sales, in the short term, 24Q1 heavy truck is expected to be driven by the two factors of peak consumption season+seasonal decline in gas prices. Sales are expected to increase rapidly, driving strong performance.

The views of Soochow Securities are as follows:

Heavy truck production and batch performance in January exceeded expectations. The company as a whole went out of storage, and channels were greatly added:

1) Production: The overall monthly output of the heavy truck industry in January was 89,500 units, +86.6%/+62.3%; 2) Wholesale: The wholesale volume of heavy trucks in January was 96,900 units, +98.8%/+85.9% year-on-month; 3) Shanghai Insurance: Heavy truck terminal sales volume in January was 33,900 units, +19.9%/-6.0% year-on-month; Looking at the zero performance of comprehensive production batches, the terminal performance was average under the influence of seasonal factors+cargo operation in January. Low base + warehouse replenishment + backorder sales volume for the same period last year Production batches performed brilliantly compared to the same period last month. 4) Exports: The heavy truck industry exported 25,800 vehicles in January, +37.6%/+33.1% year-on-month. 5) Inventory: Heavy truck industry enterprise inventory in January - 0.73 million vehicles; channel inventory +37,200 vehicles; enterprise side removed storage, channel side added significantly. Looking ahead to February, considering the impact of the Spring Festival holiday, the bank expects wholesale sales of the heavy truck industry to be around 62,000 vehicles, -19.7%/-36.0% month-on-month, with a cumulative total of 159,000 units from January to February, +26.2% over the same period last year.

Industry structure: The penetration rate of new energy decreased month-on-month, and the penetration rate of new energy in the heavy truck industry was 10.6%, -6.5 pct month-on-month.

In January, sales of new energy products in the domestic heavy truck industry were 3607 vehicles, and the industry penetration rate was 10.6% (pure electric+hydrogen energy+fuel cell), +5.6/-6.5 pct, respectively. Among them, the sales volume of pure electric heavy trucks was 3,513 units, +155.9%/-32.0%; fuel cell heavy truck sales volume was 94 units, +62.1%/-90.7%, respectively; sales volume of natural gas heavy trucks was 6,370 units, +95.8%/+3.7% year over month, respectively. The penetration rate of natural gas heavy trucks was 18.80%, +7.3/+1.8pct, respectively. The month-on-month performance of new energy heavy trucks did not match that of heavy fuel trucks in January, and sales of fuel cell heavy trucks dropped sharply month-on-month.

Company dimension: The overall wholesale growth of major heavy truck companies was high in January, and FAW/Dongfeng/Sinotruk led the industry in sales performance.

1) Wholesale: The top five domestic heavy truck wholesale sales volume (including incomplete vehicles and semi-trailers) in January were Sinotruk/FAW Group/Dongfeng Automobile/Shaanxi Heavy Duty Truck/Beiqi Foton, with sales volumes of 2.60/2.40/2.08/1.15/0.67 million vehicles, respectively, with market share of 26.9%/24.8%/21.5%/11.8%/6.9%; CR5 was 91.9%, +2.2/+14.1 pct, respectively, with a month-on-month increase in the concentration of heavy truck terminals in January; 2) Shanghai Insurance added domestic heavy truck terminals in January Risk amount (including incomplete vehicles) (and semi-trailers) The top five companies were Dongfeng Motor, FAW Group, Sinotruk, Foton, and Shaanxi Heavy Duty Truck, respectively. The market share was 22.3%/21.9%/16.2%/10.0%/9.0%, CR5 was 79.3%, -6.1/+5.1 pct, respectively, with a month-on-month increase in concentration.

Engine support dimensions: Weichai's engine support volume declined year-on-year, and Jiefang/Sinotruk all maintained a major supplier, and the leading position for heavy truck engines was stable.

1) Engine company perspective: Weichai Power supplied 0.87 thousand units in January, -7.4%/+3.9% compared with the same period, the core supporting car companies were Sinotruk/Shaanxi Automobile Group/FAW Group/Dongfeng Automobile/Dayun Group. The five automakers accounted for 33.8%/25.3%/24.8%/5.0%/3.1% of shipments respectively, CR5 was 92.1%, +1.5/-0.7pct compared to the same period; 2) Looking inside the automaker: Shaanxi Heavy Duty Truck/Sinotruk/FAW Jiefang/Dongfeng Dongfeng Motor The proportion of Weichai engines supplied by the Tien Automobile Company 71.8%/53.3%/29.0%/5.8%/4.6%, respectively, -11.7/+15.4/-13.7/-6.8/-10.1pct year-on-year, and -0.3/+3.7/+1.8/-1.4pct, respectively. Weichai is the core supply chain for Shaanxi Auto/Sinotruk/Jiefang.

Investment advice: With the triple support of heavy gas trucks+bid switching+economic recovery, the heavy truck sector is expected to start a new upward cycle in 24-25, and I am optimistic about the layout opportunities for the 24Q1 heavy truck consumption season.

1) On a medium- to long-term perspective, the three factors of heavy gas truck+national 4 elimination and project recovery resonate, and are firmly optimistic about the 2024-2025 upward cycle. Domestic and international natural gas production capacity has been implemented, domestic natural gas supply is abundant, and the penetration rate of heavy gas trucks is expected to increase further in 2024; in line with the elimination of national quadruple trucks and the catalytic drive of trillions of treasury bonds to repair engineering heavy truck sales, the bank expects wholesale sales of the domestic heavy truck industry to be 112/1.3 million vehicles from 2024 to 2025, respectively, +21.3%/+15.9% year-on-year; 2) In the short term, 24Q1 heavy truck is expected to drop seasonally during the peak consumption season + gas prices Driven by factors Sales are expected to increase rapidly, driving strong performance to be realized.

Investment in the heavy truck sector focuses on strong α (natural gas heavy trucks benefit) + performance and high deterministic varieties to deploy Weichai Power (000338.SZ) + Sinotruk (000951.SZ) + FAW Jiefang (000800.SZ), and Foton Motor (600166.SH).

Risk warning: The recovery of the domestic heavy truck industry fell short of expectations, and the rise in natural gas prices exceeded expectations.