SINOTRUK(03808.HK)：BOTH SV AND ASP ROSE WITH STRONG EXPORT SALES IN 1H2024;OVERSEAS MARKET SHARE IS EXPECTED TO FURTHER GROW; "BUY"-格隆汇

机构：国泰君安国际
研究员：Ivan Wu

Maintain "Buy" with a TP of HK$25.00. Considering 1) SInotruk’s (the “Company”) overseas business is progressing smoothly and its market share is further increasing; 2) the domestic market sales of natural gas HDTs are booming; 3) the central government's new policy of "trade-in for new" is gradually being implemented, we estimate that Sinotruk’s EPS in 2024F-2026F to be RMB2.629/ RMB3.251/ RMB3.876, with a TP of HK$25.00, corresponding to 8x 2024 PER.
HDT sales achieved both sales volume (SV) and price rising, with significant results in cost reduction and efficiency improvement. Sinotruk's 1H2024 DHT sales continue to grow steadily. Its 1H2024 top line was RMB48.8 bn, up 18.0% yoy. In 1H2024, its GPM dropped by 1.1 ppts yoy to 14.7%. During the period, the Company's administrative expenses to total revenue dropped 0.3 ppt to 4.8%; benefiting from the Company's increased efforts to reduce costs and increase efficiency, its selling expenses to total revenue in 1H2024 increased by 0.4 ppt to 3.1%. In 1H2024, the Company recorded net profit attributable to shareholders of RMB3.3 bn, jumped by 40.4% yoy. In 1H2024, the Company's overall HDT vehicle sales reached 123,017 units, up 14.8% yoy; average revenue/ unit of HDT increased by RMB5,568, to RMB331,243, up 4.2% yoy; the overall LDT sales volume were 56,922 units, up 14.5% yoy, with average revenue/ unit of LDT increased by RMB12,715 to RMB101,921, up 14.3% yoy. Sinotruk distributed interim dividends for the first time.
Natural gas HDT sales surged, and Sinotruk is seizing the opportunity of structural transformation in the HDT industry. The competition landscape in the HDT industry is relatively concentrated, and the "National III" condemnation subsidy policy has boosted the recovery of domestic HDT demand. Emerging economies have become the main competitive market for China HDT exports. The industry's overseas competition is relatively less intense than the domestic one, mainly dominated by several overseas giants. China's HDT exports continue to grow, and the emerging economy market is a new blue ocean. China's main strategies for HDT OEM exports are as follows: 1) focusing on deepening the African + Southeast Asian markets, and at the same time accelerating the increase in Russian market share; 2) actively exploring and exploiting the Middle East and South American markets. In 1H2024, China's HDT sales reached 507,000 units, a yoy increase of 3.8% (from the high base last year). Sinotruk’s cumulative sales volume was 136,000 units in 1H2024, which was basically flat compared to same period of last year (138,400 units).
Export market demand continues to be strong, and Sinotruk continues to optimize and enhance its competitiveness in overseas markets. Sinotruk has further expanded its market share by leveraging its brand and mature operating channel advantages in overseas markets, mainly from Southeast Asia and Africa, where market shares continue to rise. Overseas demand for HDTs is mainly concentrated in the African and Southeast Asian markets, the Middle East and Latin American markets, and the Russian market. In 1H2024, China's HDT and LDT sales combined reached approximately 351,100 units, reaching a historical new record, representing an increase of 6.0% yoy. Sinotruk exported 68,415 units of HDTs, a yoy increase of 4.9%. We expect the Company's HDT sales to remain at around 240,000 units in 2024.
Risks: 1) Global economic recovery may be slower than expected; 2) overseas market expansion may fall short of expectations.