China's auto parts industry is expected to exceed earnings expectations

According to statistics, the total sales of automobiles in September 2010 reached 1.5567 million vehicles, an increase of 16.89% year-on-year and an increase of 17.73% compared with the previous period. From a quarter-on-quarter perspective, the average of September-to-September 2009 from September to August increased by 18.04% over the same period of the previous month. In September 2010, it remained stable. Since the mid-to late-July 2010, the "price-for-money exchange" has driven the auto market to pick up steadily, and sales in early August have not overdrew the follow-up performance. The traditional peak season that began in September makes the auto market still worth looking forward to.

As of September, cumulative sales in 2010 were approximately 13,139,400 units, an increase of 36.2% year-on-year. It is expected that the auto and auto parts industry will go out of the “high and stable” situation throughout the year, with a year-on-year growth rate of 25%, which is expected to slightly exceed market expectations. Due to the existence of economies of scale, the profitability of the industry is also expected to exceed expectations in the absence of a vicious price war.

Significant increase in sales in the first 9 months

From the sales data of the passenger vehicle market, we believe that the entire industry will spend the off-season with “price-for-money exchange” through the off-season. After entering September, it is expected to further stabilize with the stimulus of a more relaxed energy-saving vehicle subsidy policy. With the expected end of year-end purchase tax reduction policy of 2.5%, auto consumption is expected to be stimulated.

The mainstream companies in the heavy truck industry have shifted from very cautious to neutral. We maintain our judgment of “preceding high and stable after the year” and sales from October to December are expected to be around 60,000 to 70,000. It is expected that the tractor market will still be difficult to start, flatbed vehicles will remain stable, and dump trucks will maintain high growth rates before the end of the year. The current mainstream companies' view of the ratio of deposits and sales is moderately optimistic, and the two-fold ratio of deposits and loans is considered acceptable. In the case where industry capacity is no longer a limiting factor, we must focus on changes in market share, which often reflect the company's core capabilities. In addition, the relationship between upstream and downstream companies in the industry also needs attention at the end of the year, especially whether there are variables in the relationship maintenance between auto parts companies and OEMs that have always had a monopoly position.

In September, the number of passenger vehicles sold was 12,1140,000, an increase of 19.3% year-on-year and a month-on-month increase of approximately 18.89%. The chain performance was slightly better than the historical period; commercial vehicle sales were 348,200, an increase of 9.0% year-on-year, and an increase of 8.2% from August. About 0.8%, an increase of 13.84% from the previous quarter, and sales have clearly recovered. Observing the accumulated data for the first nine months of 2010, passenger cars and commercial vehicles respectively sold a total of 9,897,300 vehicles and 3,421,100 vehicles, an increase of 36.9% and 34.3% respectively year-on-year. The rapid growth of sales and the return to normal seasonal performance indicate that the automotive industry will be a good year in 2010.

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