The Zhitong Finance App learned that Guolian Securities released a research report saying that the heavy truck industry's sales volume will recover from the bottom in 2023, domestic sales growth will pick up, and natural gas and exports are structural highlights. Judging from the absolute value of sales, the current sales volume is still below the lower limit of the central sales range. Looking ahead to 2024, engineering and logistics may continue to recover under marginal stimulus from economic policies, and the elimination policy is expected to boost the total volume of the industry. In terms of natural gas, due to supply-side increases, gas prices fell faster in 2024 than the same period last year, and continued to be at a phased low level. They are optimistic that the penetration rate of heavy natural gas trucks will increase in 2024, driving the industry's profit structure to continue to improve.

Key recommendations: Weichai Power (02338), Sinotruk (03808), Yinlun Co., Ltd. (002123.SZ), Longsheng Technology (300680.SZ).

Industry event: First Commercial Vehicle Network released sales data for the heavy truck industry for March 2024.

The main views of Guolian Securities are as follows:

Downstream demand is expected to recover further, and overall sales are in line with expectations

According to data released by First Commercial Vehicle Network, the sales volume of the heavy truck industry in March 2024 was about 106,000, +77% month-on-month and -8% year-on-year, in line with market expectations. The same period last year was 115,000, of which 76,000 were domestic sales, 24,000 exports (China Automobile Association), and 15,000 stocks were replenished. The cumulative sales volume in January-March was about 263,000 units, an increase of 9% over the previous year, continuing the upward recovery trend of the total heavy truck sales cycle in 2023. The year-on-year decline in sales in March was mainly due to the weak demand side: January-February real estate construction area was -29.7%; the latest logistics index (March 21) was 1024.6, -0.39 month-on-month, and -1.67 year-on-year, which is still at the bottom of the cycle.

The highlights are: 1) Natural gas prices continued to fall, and the gas heavy truck penetration rate increased rapidly. On March 20, the gas price was 4.11 yuan/kg, -15.7% compared to the same period in March last year (compared with the high gas price drop of about 26.6% in January 24, and the overall trend is still fluctuating downward), and the diesel-natural gas sky price difference reached 3.64 yuan/kg, an increase of about 19.7% over the same period last year. Gas vehicles are showing signs of downstream recovery. The domestic manufacturing PMI in March was 50.8, +1.7 month-on-month, and the construction industry's MIPMI was 50.8, +1.7 month-on-month. 56.2, ring With a ratio of +2.7, they are all above the boom and dry line.

Guiding a new round of large-scale equipment updates and eliminating national IV vehicles ahead of schedule is expected to drive industry growth

On March 1, the Executive Meeting of the State Council reviewed and approved the “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-in” to promote a new round of large-scale equipment renewal and trade-in of consumer goods, which is expected to drive the growth of related equipment and heavy trucks. In November 2022, 15 departments including the Ministry of Ecology and Environment jointly issued an action plan to combat pollution, proposing that by 2025, new energy and national six emission standard trucks will account for more than 40%.

Beginning in 2023, some regions, such as Beijing, Zhejiang, Shandong, and Henan, will begin to accelerate the elimination of national IV vehicles and provide elimination subsidies. By the end of 2022, the number of heavy trucks owned nationwide was 8.94 million. After deducting the sales volume of China 5 and 6 since 2017 (7.17 million), the remaining 1.77 million vehicles were to be phased out in China IV and below. Sales are expected to reach more than 1.1 million units in 2024.

In terms of pattern, due to seasonal factors, the market share of various car companies fluctuates greatly

From January to February 2024, the cumulative sales volume of Sinotruk, FAW Jiefang, Dongfeng Group, Shaanxi Automobile Group, and Foton Motor was about 4.5/3.4/3.0/2.1/12,000 vehicles, +23%/+27%/+62%/+43%/-3%; the market share was about 29.1%/22.0%/19.3%/13.2%/7.5%, compared with +3.3/+1.9/-2.6/-2.3pct in 2023. CR3 and CR5 in the heavy truck industry from January to February 2024 were about 70.4% and 91.1%. Compared with 2023, they increased 8.0 pcts and 3.1 pcts respectively, and the market share was further concentrated in the leading position.

Risk warning: Geographical conflicts have intensified, driving up LNG prices; the recovery of the logistics industry falls short of expectations, affecting cargo and tractor sales; policy implementation falls short of expectations and cannot effectively drive demand for terminal updates and replacements.