Benefiting from the booming momentum of downstream supporting industries, Weichai Engines achieved rapid growth in production and sales volume in the first half of the year, with sales of approximately 135,000 units in the first five months, a year-on-year increase of approximately 63%.
Shaanxi Zhongqi has achieved a growth rate higher than the average level of the industry. On the one hand, it is related to the higher overall prosperity of the heavy-duty truck industry; on the other hand, it also has the advantage of integrating Weichai Power with Weichai to create an advantageous industrial chain and create a synergy effect. relationship.
Driven by the heavy-duty truck industry, Fast Gear and Hande Axle also achieved rapid growth. The sales growth in the first five months of 2007 was above 90%.
Non-core assets that are less related to the auto industry or have a general profitability have been removed and the internal integration work is basically completed.
Starting from July 1, light vehicles will strictly comply with Euro 3 emission standards. However, the execution time of heavy vehicles may be delayed.
We believe that the major factors that will promote the rapid growth of the heavy truck industry in the first half of the year will continue to exist for a longer period of time. Although the implementation of Euro 3 emission standards will bring certain uncertainties to the industry, considering the combined effects of various factors, we have reason to believe that the heavy truck industry continues to grow.
1. The high boom of the heavy truck industry drives the rapid growth of the company's business
1.1 Weichai Engine: The Help Behind the Prosperity
Weichai Power is one of the major manufacturers of high-power high-speed diesel engines in China. Its core products are WD615 and WD618 series diesel engines. These products are mainly used for supporting end products such as heavy-duty vehicles, construction machinery, ships, large passenger cars and generator sets.
Weichai Engine has a higher market share in the heavy-duty automotive power matching market and loader power matching market.
In the first half of 2007, benefiting from the booming economy of downstream supporting industries, Weichai’s engine production and sales volume achieved rapid growth in the first half of the year, with sales of approximately 135,000 units in the first five months, a year-on-year increase of approximately 63%.
We use the company's slogan to evaluate its engine business: "Weichai Power: The Power Behind the Prosperity."
1.2 Shaanxi Zhongqi: beneficiaries of synergy
The main business of Shaanxi Zhongqi is the manufacturing and sales of heavy-duty vehicles and heavy-duty vehicle axles. The products cover heavy military off-road vehicles, heavy trucks, buses (chassis), medium trucks, heavy-duty axles and other fields.
Through the long-term cooperation with German MAN, Shaanxi Automobile Group has exclusively introduced the MANF2000 series heavy truck technology, thus forming a new generation of upgraded heavy-duty trucks in China.
Shaanxi Heavy Duty Truck has unique advantages in manufacturing heavy-duty military off-road vehicles, large-tonnage commercial vehicles, and high-grade buses (chassis). Its technical level has always been leading in China, and has remained the only designated equipment after the national selection and comparison test. Heavy military off-road vehicle production base.
The data of the first five months of this year show that Shaanxi Heavy-duty Auto has achieved a growth rate that is higher than the average level of the industry. We believe that this aspect is related to the higher overall prosperity of the heavy truck industry; on the other hand, it also joins Weichai to absorb the merger of the Hunan Torch and build it. There is a greater relationship between the advantageous industrial chain and the formation of synergies. The gold combination formed by Shaanxi Heavy Duty Truck and Weichai Engine has become an important selling point of the company's products, which has contributed to the rapid growth of sales.
1.3 Fast Gear and Hande Axle: With the rapid growth of heavy truck industry
The main business of Fast Gear is the manufacturing and sales of auto parts such as automobile transmissions, gears and forgings.
The concentration of the heavy-duty transmission industry is relatively high, and in the area of ​​commercial vehicles of more than 15 tons, it is basically monopolized by Fast.
The main business of Hande Axle is the production, manufacture and sale of automotive axles and axle components. Hande Axle is one of the largest production bases of Steyr Bridge in China. Through technical introduction and technical cooperation, the technical level of Hande Axle is at the leading position in China.
Driven by the heavy truck industry, Fast Gear and Hande Axle also achieved rapid growth.
Among them: Fast sold 243,655 units of heavy-duty transmissions in the first half of the year and achieved sales revenue of 3.275 billion yuan, which represented a year-on-year increase of 112.62% and 121.36%, respectively. In the first half of the year, the market share of Fast Transmission increased further, reaching 86% in the heavy-duty vehicle market with a weight of over 8 tons, and 93% in the heavy-duty vehicle market with a load of over 15 tons.
At the same time, Fast has seized the opportunity of rapid development of the heavy-duty truck industry, significantly increased its production capacity, and invested RMB 1 billion in the construction of 12-speed and 16-speed transmission production bases in the Xi'an High-tech Zone, increasing the annual production capacity of its heavy-duty transmissions. To 500,000 units.
In addition, Hande Axle also achieved rapid growth. In the first half of 2007, sales increased by more than 90%.
2. Asset consolidation basically completed
In June of this year, the company signed a share transfer agreement with Mayet Beijing to sell the company's MAT to Maite Beijing (Qingdao Hongben, Hangzhou Hongyuan Machinery, Hangzhou Hongyuan Sports Products, Kunshan Hongyuan, Tianjin Hongben, Tianjin Hongning, Tangshan Hongben) each company holds 75% of the equity, and 49% of Dalian Hongyuan’s shares.
At this point, the company has been stripped of its non-core assets, which are less related to the auto industry or have a fair profitability, and the internal integration work is basically completed. The future business of the company will focus on the automotive and core parts industries, which will help to concentrate its energy and various resources to achieve the development goals of the auto industry.
3. Views on the development of the heavy truck industry
The heavy-duty truck industry has developed rapidly this year, and the growth rate has exceeded the expectations of the industry and beyond. Whether this kind of rapid development can be sustained or not, the views of various parties are quite different. According to our investigation, some companies are cautious about the development of the heavy-duty truck industry. They believe that after rapid growth, they may face slower growth and even lower production and sales.
Our view is: to determine whether the development status of the heavy-duty truck industry in the later period can be sustained, it is necessary to analyze the main factors that lead to the rapid growth of the industry. If these factors continue to exist, the latter industry may maintain a relatively rapid rate of development.
Specifically, we believe that the rapid growth of the heavy-duty truck industry this year is a compound effect of the following factors:
(1) The development of the national economy is in a good situation, and the flow of goods throughout the society has grown rapidly. The gross domestic product of the first quarter was 5.0287 trillion yuan, a year-on-year increase of 11.1%. The stable and rapid development of the national economy has led to an increase in the flow of goods throughout the country, and the development of the logistics industry has put forward new requirements for transportation equipment. The data in Table 3 shows that in recent years, the average freight transport distance of the entire society has been prolonged, and the extension of the transport distance has put forward higher requirements on the reliability, sustainability, stability and comfort of the transport vehicles, as compared to medium and light trucks. Heavy trucks better meet the needs of the development of the logistics industry.
(2) Investment in fixed assets maintained a relatively high growth rate. As a means of production, heavy trucks have a large correlation with the growth rate of fixed assets investment in the whole society. Although the country has stepped up macroeconomic control since the beginning of this year, investment growth rate remains at a relatively high level of about 25%, supporting some of the demand for heavy truck products (especially for construction vehicles).
From a longer period of time, the heavy-duty truck industry shows a certain periodicity, that is, it has a close relationship with China's five-year plan. At the beginning of each five-year plan, with the implementation of government investment plans at all levels and capital investment, heavy truck consumption started in the second half of the first year of the five-year plan, and then continued to grow. By the end of the five-year plan, all investment projects were basically completed, and the heavy-duty truck industry has become dull. At present, in the early stage of the 11th Five-Year Plan, related investment projects have started one after another or entered peak construction period, which has stimulated the consumption of heavy truck products.
(3) Toll-by-road tolls lead to changes in the structure of vehicle purchases. The most important factor currently affecting the industry is the weight-based charging policy. With the implementation of the policy throughout the country, the way to make money by overloading has been blocked from the root, thereby changing the user's demand for transport vehicles and making multi-axle trucks and tractors become hot models. On highways and major national highways, "efficient, fuel-efficient" heavy trucks have become the user's preferred model.
(4) The imminent implementation of Euro 3 emission standards led to the early release of some purchase requirements. The engine that meets Euro 3 emission standards adopts four-valve, high-pressure common rail and other technologies, and the product price is about 20% higher than that of similar types of Euro 2 products. Some users expect the heavy truck products to increase in price after the implementation of the new emission standards, and thus purchase ahead of schedule and purchase Euro 2 products, thus forming a special demand in the first half of this year.
(5) Currently entering the peak of update. From the life cycle of heavy trucks, the average retirement period is about 6-8 years. With the purchase and replacement of peak purchase vehicles in 2000, the heavy truck industry will usher in a new round of replacement peaks around 2008.
Among the above factors, logistics demand is a long-term factor and will remain for a long time to come; fixed-asset investment and toll-by-road pricing policies are mid-term factors that will continue to exist in the next 2-3 years.
What is currently uncertain is the Euro 3 emission standard factor.
Based on the above analysis, we believe that the main factors contributing to the rapid growth of the heavy-duty truck industry in the first half of the year will continue to exist for a long time to come. Although the implementation of Euro 3 emission standards will bring certain uncertainties to the industry, considering the combined effects of various factors, we have reason to believe that the heavy truck industry will continue to grow.
In addition, according to the latest “Eleventh Five-Year Plan†issued by the Ministry of Communications, the total length of highways in the country during the “Eleventh Five-Year Plan†period will reach 2.3 million kilometers, of which the mileage of highways will exceed 70,000 kilometers. The continuous improvement of transportation infrastructure will provide the heavy truck industry with a more favorable external development environment.
4. Views on Euro 3 emission standards
According to the requirements of the national environmental protection policy, the third-phase limit (GB18352.3-2005) of national standards for pollutant emission of motor vehicles equivalent to the European No. 3 standard has been implemented nationwide since July 1, 2007, marking China's implementation Vehicle emission control has entered a new phase.
In accordance with the requirements of the National III standard, all new styling light vehicles must meet the requirements of the type-approved emission limits stipulated in the standard and cease to meet the second-phase emission limits of the national motor vehicle emission standards as of July 1, 2007. (National Standard II) Light vehicle type approval, starting July 1, 2008, a complete stop to only meet the "National Standard II" light car sales and registration.
Regarding the Euro 3 emission standard policy requirements, our views are as follows:
(1) The actual execution time of heavy vehicles will be postponed. The standard clarifies that light vehicles must meet emission standards within the prescribed time. According to the information available to us, passenger car companies currently meet the above emission standards.
However, this standard does not set forth a clear requirement for the time to stop the sale of heavy-duty trucks such as heavy-duty vehicles. Therefore, the current Euro 2 standard products can also be sold. However, it is certain that the emission standards for heavy vehicles, including heavy trucks, will also increase, but the specific implementation time may be constrained by factors such as user acceptance and oil quality.
(2) Technical preparations are basically ready. At present, most engine manufacturers have mastered production technologies that comply with Euro 3 emission standards. However, due to the fact that Euro 2 products have not yet been banned from sales, Euro 3 emission standards have higher prices, and oil quality standards on the market have not yet been synchronized. As a result, the current market is still dominated by Euro 2 products, and engine manufacturers and vehicle manufacturers have not yet mass-produced Euro 3 emission standard products.
However, once the Euro 3 emission standards are implemented, major engine manufacturers such as Weichai Power can complete the conversion in a short period of time.
For vehicle manufacturers, before and after the upgrade of emission standards may cause users and the market to wait and see attitude, have a certain impact on production and sales. However, due to the existence of other positive factors that determine the development of the industry, the growth trend of heavy truck industry will not change, but the growth rate may decrease.
View related topics: Weichai Power: Expanding Auto Parts Gold Industry Chain
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