[买入评级]CNHTC JINAN TRUCK(000951)：EARNINGS REMAIN HIGH ORDERS STILL SOLID
Earnings preannounced to rise 190–240% YoYCNHTC-Jinan preannounced that its 1–3Q17 net profit would likelyrise 190–240% YoY to Rmb657–770mn.
Trends to watch
Additional pressure from rising raw material prices; per vehiclenet profit declines QoQ in 3Q17. CNHTC estimates the 3Q17 pervehicle net profit will fall 16% to Rmb6,500. The firm attributesthe decline mainly due to a 10% QoQ drop in sales volume andthe additional pressure from rising steel prices.
End-user demand for HDTs remains solid; ample backlog orders.Given the solid demand for HDTs and ample backlog orders, weexpect 4Q17 results to remain largely flat QoQ. If CNHTC-Jinanmaintains its market share, its sales volume should surpass130,000 units in 2017.
Stable product mix; medium-to-long-term benefit fromimproved MAN technology. HDT sales volume should not wildlyfluctuate thanks to the competitive MAN technology. Over themedium-to-long term, we remain upbeat on the earnings boostfrom MAN technology.
Valuation and recommendation
CNHTC’s hares have recently been fluctuating within a narrow range.We believe the company is facing risks to both the upside （steadyearnings improvement and better-than-expected demand） and thedownside （production limits amid environmental inspections andrising raw material prices）。 That said, we see more upside risks ahead.
Maintain BUY. Given that the short-term pressure from rising rawmaterial prices remains, we trim our 2017 and 2018e earningsforecasts 6.9% and 6.4% to Rmb980mn and Rmb1.02bn and cut ourTP 3% to Rmb23, implying 15x 2018e P/E.
Rise in raw material prices and production cuts amid environmentalinspections beat expectations.
□ .W.e.i. .F.E.N.G./.D.a.n.l.i.n. .R.E.N .中.国.国.际.金.融.股.份.有.限.公.司