The heavy truck industry achieved a positive growth year-on-year in five consecutive months of sales, and inventory remained low
In August, heavy trucks sold 51,551 vehicles in a single month, an increase of 5.5% from the previous quarter and an increase of 34.7% over the previous year. From January to August this year, cumulative sales of heavy trucks reached 503,000 vehicles, accumulatively increasing 12.1% year-on-year. Since April, heavy trucks have achieved positive growth year-on-year for five consecutive months and inventory has remained low, showing signs of industry recovery.
It is expected that the replacement demand and the elimination of the "Yellow Label" will support the growth of heavy truck sales in the next two years. Due to the peak sales volume in the period of 07 to 10 years, the heavy truck industry in the next two years is expected to usher in a small update demand.
Under the background of the deceleration of GDP growth, we conservatively estimated that the heavy truck update cycle has been extended to 6 years, and it is expected that the update demand in 14-15 years will reach 530,000 and 630,000 vehicles respectively. Benefiting from the elimination of the yellow-labeled vehicles, we expect the heavy-duty truck industry will add an additional 150,000 new vehicles annually on average in the next two years.
Natural gas price increase inhibits the rapid growth of LNG heavy trucks, which is favorable for the growth of China IV diesel engine parts. We expect natural gas prices to continue to rise in the next 3 to 5 years, the economics of LNG heavy trucks will be weakened, and the growth of LNG heavy truck sales will slow. We believe that the future of LNG engines for the National IV diesel engine is limited. According to overseas mature market experience and domestic experts' estimation, LNG heavy trucks account for 15% of annual heavy truck sales.
Recommendations for growth stocks in the heavy truck segment Weifu Hi-Tech and a low valuation blue chip Weichai Power In the near term, the stock price adjustments of Weifu and Weichai were mainly due to the decline in valuation, and the earnings consensus forecast was relatively stable. With the moderate recovery of the macro economy, the continuous improvement of industry data and the approach of the A-share market style approaching, we believe that the probability of continued upward adjustment in the valuation of individual stocks is increasing.
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