CITIC Securities: January car sales are in line with expectations Focus on seizing the rebound opportunities in the auto sector

Zhitong Finance APP was informed that CITIC Securities released a research report saying that the production and sales data of the automotive industry were released smoothly in January, and the sales of new energy vehicles continued to increase year-on-year. At present, independent brands continue to rise, and the industry's profit margin recovers quarter by quarter, it is recommended to focus on seizing the rebound opportunity of the automobile sector.

In the parts sector, priority is given to recommending globally competitive growth companies: Baolong Technology (603197.SH) (intelligent sensor), Wencan (603348.SH) (integrated die casting), Longsheng Technology (300680.SZ) (EGR faucet + motor core rapid growth), Jifeng Co., Ltd. (603997.SH) (global automotive headrest leader, new expansion of passenger car seat business), Bethel (603596.SH) (Domestic leader in automotive braking systems), Nexteer (01316) (benefiting from the launch of new energy vehicle products in the United States), Huayu Automobile (600741.SH) (electric, intelligent and lightweight leader), Alter (300825.SZ) (rapid increase in automotive design orders), Huayang Group (002906.SZ) (ARHUD), Fuyao Glass (03606) (Tianmu Glass).

In the passenger car sector, three new car-making forces are recommended: Xiaopeng Automobile (09868), Ideal Automobile (02015), NIO Automobile (NIO. US), as well as Great Wall Motors (02333), which leads personalized consumption and accelerates the transformation of intelligent electric vehicles, BYD (01211), which has a strong DM-i force, and GAC Group (02238), whose independent brands have ushered in a reversal.

The main views of CITIC Securities are as follows:

On February 18, 2022, the China Association of Automobile Manufacturers released the january 2022 automobile production and sales data, and the comments are as follows:

Total vehicle volume: Sales in January were 2.531 million units,+0.9% year-on-year, in line with expectations.

According to the China Automobile Association, in January 2022, Mainland Automobile produced 2.422 million units, -16.7% month-on-month and +1.4% year-on-year; in January, it achieved sales of 2.531 million units, -9.2% month-on-month and +0.9% year-on-year. In January, the number of domestic narrow passenger cars reached 2.173 million units, -0.6% month-on-month and -4.1% year-on-year, which was basically in line with expectations. Overall, the supply of chips in January continued to ease, and the market demand will remain relatively stable when the local governments have introduced stable growth policies.

Passenger cars: Sales of passenger cars reached 2.186 million units in January, and its own brands continued to maintain their outstanding performance.

In January 2022, production and sales reached 2.077 million units/2.186 million units, respectively, -17.8%/-9.7% month-on-month and +8.7%/+6.7% year-on-year, respectively. By model, sales of sedans, SUVs, MPVs and crossover passenger cars increased by +4.1%, -1.4%, +8.7% and +78.0% respectively year-on-year. In terms of structure, the sales volume of independent brands in January was 1.004 million units, +15.9% year-on-year, and the monthly market share of independent brands reached 45.9%, -1.0pct month-on-month. We expect that 2022 will still be the year when independent brands will continue to increase their share, and the year-on-year growth rate of independent brands will continue to become the α of the industry.

Average daily sales increased slightly month-on-month, and demand for passenger cars was stable during the Spring Festival.

Excluding the Spring Festival holiday, the actual number of days of effective production and sales in January was 29 days, and the average daily wholesale sales of passenger cars in January reached 75,000 units, -3.5% month-on-month, +14.3% year-on-year, compared with +3.2% year-on-year in January 2019; and the average daily retail sales of passenger cars in January reached 75,000 units, +6.6% month-on-month, +2.8% year-on-year, compared with January 2019 -11.6%. Judging from the data on the average number of days of effective sales per day, the overall demand for passenger cars remained stable and did not fluctuate much. New energy passenger cars achieved an average daily wholesale sales of 15,000 units in January, -7.5% month-on-month and +168.2% year-on-year, maintaining rapid growth.

Commercial vehicles: Commercial vehicle sales reached 344,000 units in January, a significant improvement sequentially (-5.5% Q-M).

In January 2022, commercial vehicle production was 345,000 units, -9.3% m/m vs- y-28.0%, and sales were 344,000 units, -5.5% m/m and -25.0% yoY. We believe that the significant improvement in commercial vehicle sales is mainly due to the fact that the transition period of "China V" vehicle sales has ended at the end of 2021, the channel "China V" vehicle inventory has been well digested, and the overdraft effect of inventory vehicles on new car sales is expected to weaken significantly. In terms of models, heavy trucks, medium trucks, light trucks, and micro trucks achieved sales of 95,000 units/0.9 million units/162,000 units/47,000 units respectively, with year-on-year growth rates of -48.0%, -45.8%, -16.5%, and +64.7%, respectively. With the steady growth related policies successively introduced by the state, the demand for the infrastructure industry is expected to increase, and it is expected that the amount of heavy trucks will form a better pull. In January, the production and sales of buses reached 30,000 units, a year-on-year increase of -14.9%/-15.8%, of which large passengers and medium-passengers achieved sales of 0.27 million units, with a year-on-year growth rate of +10.3%/-16.1%, respectively.

New energy vehicles: Sales in January were 431,000 units,+135.8% year-on-year, continuing the high growth trend.

In January 2022, production and sales of new energy vehicles totaled 452,000 units/431,000 units, up from -12.6%/-18.6% month-on-month and +133.2%/+135.8% year-on-year, respectively. Among them, the production and sales of new energy passenger cars in January reached 437,000 units/419,000 units, respectively, -10.4%/-15.7% month-on-month, +134.6%/+138.7% year-on-year, and sales accounted for 19.2% of the passenger car market share, higher than the level of last year. Production and sales of new energy commercial vehicles in January reached 16,000 units per 12,000 units, respectively. By model, production and sales of pure electric vehicles in January totaled 367,000 units/346,000 units, up 1.2 times year-on-year, and plug-in hybrid vehicles produced and sold 85,000 units, up 2.0 times year-on-year.

Risk warning: the industry's sales volume is less than expected; the implementation of consumption incentive policies does not meet expectations.

This article is compiled from "CITIC Securities Research", analysts: Yin Xinchi, Li Jingtao, Yuan Jiancong, Li Zijun; Zhitong Finance Editor: Huang Xiaodong.