Automotive industry: Intensified differentiation adheres to white horses

The sales volume of automobiles in the first two months was -6% year-on-year, of which passenger vehicles sales -4.4% year-on-year; commercial vehicle sales -12% year-on-year.

Truck chassis, crossover passenger vehicles and semi-trailer tractors have experienced large declines. In the first two months, the year-on-year increase in automobile import and export volume was 33% and 23.5%, respectively.

The differentiation of passenger cars has intensified. We do not think that autonomous cars and micro-buses will recover in the year: SUVs and MPVs are increasing in January-February, and passenger cars and micro-customers are down year-on-year. Self-determined cars are in mourning, and German and Korean cars have grown.

Heavy trucks have not seen improvement in the same period, and logistics vehicles may stabilize. The cardinal number causes heavy trucks to improve significantly in the second half of the year.

During the year, heavy truck companies will intensify promotion and financial support, which may reduce overall profitability.

School bus exports to the two-wheel drive bus industry, school bus market has been basically formed: January-February accounted for 14.2% of bus sales, the leading company Yutong bus school bus market share is stable, the advantages are outstanding.

In 2012, the increase in industry profits or the year-on-year decrease in industry profit growth in 2011 is much higher than the increase in sales, mainly due to the industry's stimulus policy is the most important factor in the current cycle, resulting in significant differentiation in sub-sectors. In 2011, the automobile manufacturing industry revenue was 16.8% year-on-year, total profit increased by 16.1% year-on-year, gross profit margin was 16.7%, and pre-tax profit margin was 8.5%.

At present, the income and profit growth rate of the automotive industry is downward. It is expected that the industry's profit level will decline in 2012, and the profit growth will be lower than that of 2011.

Investment suggestion: Intensification of differentiation is the main theme during the year, and it is advisable to stick to the optimistic expectations of Baima’s performance in the secondary market since the beginning of the year. However, we believe that the fundamentals of the auto industry will continue to be differentiated and the magnitude will be greater than in 2011. Stronger Hengqiang The situation will not change. Sticking to the White Horse is still the best policy.

We maintain our judgment on the fundamentals of the auto industry in 2012: sales growth in the first quarter bottomed out, profit growth in the first half of the year bottomed out, and year-on-year improvements in the second half.

Our views on the various sub-sectors of the automotive industry in 2012 are as follows:

Passenger car differentiation has intensified, highlighting the SUV. The selection of the subject adheres to the principle of "new model" contribution.

The heavy truck industry is expected to recover in 2013. The increase in the second half of 2012 will improve.

With the growth of school bus export two-wheel drive buses, Yutong’s leading position is more stable, and its performance may exceed expectations.

The basics of spare parts lag behind the warming up of the entire vehicle and patiently wait for layout opportunities.

The fundamentals will soon bottom out in the second quarter, but it is expected that as the annual report and the quarterly report continue to disclose, the market is expected to lower the earnings of some stocks. After the speculative bubble burst, it is still the best policy to stick to the White Horse.

SAIC (600104): High-quality white horse, valuation is low.

Great Wall Motor (601633): High growth of core business SUVs.

Yueda Investment (600805): The growth of the automotive business was determined during the year.

Weifu Hi-Tech (000581): Short-term results are under pressure, and future growth will be determined.

Yutong Bus (600066): School bus order-driven growth, new energy bus layout in the future.

Risk Warning: 1) The uptick of stock prices based on optimistic expectations will face a burst of bubbles after the fundamentals cannot be fulfilled; 2) The profitability of some companies due to the intensified differentiation has fallen sharply.