Frbiz Reports Car Boom Peaked Auto Stocks A Chance To Parts And Components Industry
We lowered the automotive industry investment rating to "neutral."
Are two main reasons: First, it is estimated sedan vehicle industry in the next two quarters, the economy tends to down, a heavy truck, in the second quarter although the economy will maintain a high momentum, but the ongoing macro-tightening expectations and "high to low" trend to suppress the level of the industry valuations.
Second, although the relatively low valuation of car plates, but with the performance of blue-chip supporting plate (Shanghai and Shenzhen 300 Index constituent stocks) since January has been a marked downward valuation of center, so that the relative valuation of the automotive industry advantage is not obvious.
Car boom peaked
Car dealers links has been in inventory last year, tensions, which is stable and the prices of the industry boom continues to climb the most direct indicators of motivation and reflection. Inventory level of tension reached a peak last December, dealers as a whole in a negative stock condition. However, after the Spring Festival, especially into March, we noted a clear reconstruction of dealer inventory signs. We estimate that three mid-late part of the average car dealer inventory levels should be close to a month.
Production beyond the level of the terminal equilibrium volume, so that a sustained recovery in stock inventory rebuilding, does not necessarily mean that the economy's decline, the key to see the extent to which the production level has reached beyond the next period of time (eg 12 months) The average sales volume is expected to end , so that inventory rebuilding of a continuing nature, while the economy down there. We expect the next 12 months, the average monthly sales of domestic passenger car standard of 760,000, compared with December 2009 has reached 870,000 peak output is about 12%, a rate significantly lower than in 2004 fall cycle, 24%, but higher than 2006 with relatively stable cycle of 3%. Therefore, the inventory redevelopment of a continuing nature.
Car boom peaked stage should have been recognized. Boom cycle began to fall, but we think the economy down cycle, the rate fell in 2004 not comparable due to a shorter boom cycle, in particular, a joint venture vehicle assembly plant too late to plant a new large-scale factory production capacity, "sunk investment" right price less stressful. We believe that the sustainability of the reconstruction of a limited inventory to promote the auto industry is entering the "promoting amount of profit concession period" vehicle price concessions will be gradually expanded the scope and intensity, in the early stages of price concessions and sales performance might be unsatisfactory, because it will stimulate the part of the consumer those who wait and see and compare the psychological.
Bullish stock spare parts
Heavy trucks in the first half was no fear of high growth, tightening policy and capacity expansion kept hidden, the local fixed-asset investment projects under the tightening is expected to start in advance, dealers inflation is expected to advance under the stocking needs, you may forward and strengthened in the first half of the heavy truck boom cycle.
We will re-card full-year sales growth forecast from 16% to 22%, but the whole year up trend from high to low apparent macro-tightening and capacity expansion of the industry in 2011 may put pressure on the economy.
We continue to follow-up bullish trend of automotive components, parts and components 2010 full-year results because of the certainty of growing stronger, because "ones who enjoy promoting quantity" of the situation so that vehicle and parts industry, the uncertainty of the lower volume growth, and the great part of the purchase price of spare parts has been basically locked throughout the year.
Investment advice: cut the automotive industry rating to "neutral." At the same time, we have a limited range based on industry boom down judgments are still bullish parts section, enter a new phase of company and product contributions to robust defensive-type companies. Key recommended universal cash flows, Dongfeng Motor, China domain cars, Jiangling Motors, Fuyao, the tripod shares, Weichai Power, Shanghai Automobile, FAW Car, Yutong Bus.
by: heiyou