时间:2018年07月12日 14:00:43 中财网
Growth continued in June 2018 vehicle sales with sedans showing a promising trend. According to theChina Association of Automobile Manufacturers ("CAAM"), China vehicle sales in June 2018 increased 4.8% yoy,with passenger vehicle ("PV”) sales having increased 2.3% yoy, and commercial vehicles ("CV") havingincreased 18.2% yoy. YTD vehicle sales increased 5.6% yoy, with PV maintaining relatively healthy growth of4.6% yoy in 1H18. Sedan sales growth was up 9.1%, further confirming the recovery of the sedan market.However, SUV sales just managed to stay flat in June 2018 (+0.52% yoy), again a slower growth rate thansedans for the second consecutive month. We think that sedan sales will continue to stay healthy after generallyseeing more model plans from OEMs (see Table-1 for sales summary in June)。 New energy vehicle ("NEV") salesmaintained high growth with production volume and sales volume up 31.7% yoy and 42.9% yoy, respectively.
Sales may slow down in the next few months. The slowdown in sales was dragged by a number of one-offfactors which could include reduction of import tariffs, the FIFA World Cup tournament and the slump in the stockmarket. The next few months are still highly uncertain on the combined effect of general tariffs reduction and theincrease of tariffs for American imports. In June 2018, the inventory alert index was 59.2, a 5.5 point increasefrom May 2018, and also slightly higher than Jun 2017 (See figure-5)。 The trend is normal compared to previousyears where the inventory index was up in the month of June. We continue to believe sales may show fluctuationsin these few months as consumers might stay put to better assess their purchase options.
Divergence is more obvious in the intensifying and uncertain market. Geely continued to show its dominantposition, with sales up 44.7% in June 2018. Sales was strong as most key models were up on a MoM basis whichis rare in the month of June. In contrast, Great Wall Motors ("GWM") sales continue to deteriorate with a declineof 3.5% yoy in June, seeing a WEY brand unable to keep up the sales momentum. Another self-owned brand,Trumpchi returned back to growth in June, but overall it has underperformed in 1H18, attributable to sluggishdemand for GS4 and GS8, their flagship models in previous years. In JV brands, Japanese brands are among thebetter brands beside Dongfeng Honda.
A month of events. No doubt the trade tension between China and US remains the major headlines.Nonetheless, China remains determined to open up its economy with the 15% import tariff for auto vehicleshaving taken effect on 1st July 2018. Moreover, China has also updated the negative list for foreign investment on28 June 2018, with companies of NEV and car-riding services to be fully relaxed from shareholding restrictions.Tesla has quickly responded to increasing selling price in China after the increase of tariffs to 40%. On 10 July2018, Tesla reached a preliminary agreement with the Shanghai government to build a factory of a capacity of500,000 units p.a. to localized Tesla cars. In Germany, GWM and BMW also agreed to form a JV in China toproduce NEV, traditional ICE and other related auto services. We believe the opening up of the auto market willeventually benefit the consumer and allow the market to improve through competitions. We expect thecompetitive landscape to start to shift faster following the implementation of the new tariffs and the relaxation onrestrictions of foreign investment.
Sector View: The auto segment has been fluctuating mainly on trade concerns between China and the US.Currently, the OEM valuation is trading at 7.2x 12M forward PER, which we consider rather low. Our top pickremains as Geely Auto (00175 HK) with "Buy" investment rating and TP of HKD 32.10.
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