Industrial Securities Zhu Xuedong
Although the automotive industry sentiment index has risen since May 2005, we believe it is still in a weak zone and will remain in a downward trend in 2006.
The increase in prices and decrease in profit and decrease in the number of factors affecting the auto industry in 2006 are the following: First, there is a serious excess of production capacity. In 2005, the auto sales volume was 575.82 units, an increase of 13.54% year-on-year, and the growth rate will not exceed 15% this year, which is approximately 6.4 million vehicles.
As the automobile projects in various places in 2003 and 2004 were put into production one after another, the current domestic automobile production capacity is about 10 million, and another project with nearly 10 million capacity is under construction. It is expected that capacity utilization will remain at a low level of 55-60% this year, which is lower than the international 70-75% capacity utilization rate. According to the U.S. experience, a capacity utilization rate of less than 66% will result in losses. Although China has a cost advantage, too low capacity utilization will lead to industry losses.
The second is the high price of oil. The rise in crude oil prices has had a negative impact on the automotive industry from both production and consumption. Although current crude oil prices have fallen from high levels, they are still higher than in 2003 and 2004. As oil prices continue to rise, relevant domestic ministries and commissions are formulating various policies to guide domestic automobile consumption. The adjustment of consumption tax and the introduction of fuel tax will definitely increase the demand for small-displacement and energy-saving vehicles.
The third is the decline in steel prices. Since steel accounts for more than 50% of the weight of automobiles, the drop in steel prices can increase the profit of auto companies.
Relevant data show that in 2003, the steel used in the automotive industry was 9.09 million tons (over 5.9 million tons), in 2004 it was 12.52 million tons (completed 7 million tons), and in 2005 it was 14.37 million tons (the entire vehicle was 8 million tons). It is estimated that the amount of steel used in the automotive industry in 2006 will reach 16 million tons (overall 8.8 million tons).
According to the average price reduction of 1,000 yuan per ton of steel, the auto industry will increase profits by 16 billion yuan (an increase of 8.8 billion yuan for the entire vehicle). Calculated on the basis of 6.2 million vehicles, the average increase of 1,400 yuan per vehicle, but according to the 2005 average price of 129,300 yuan, as long as the car prices in 2006 fell more than 1.1%, will reduce the positive impact of steel prices. Taking into account the serious overcapacity and the continuation of trends, we believe that the decline in car prices in 2006 must be above 3%.
Based on the above factors, the favorable factors for the industry are mainly the decline in steel prices. The unfavorable factors are mainly reflected in the decline in vehicle prices and the rise in oil prices. Among them, the unfavorable factors dominate, so the auto industry will continue to maintain the volume increase, the price drop, the profit reduction and the declining economy.
We are cautiously optimistic about small-displacement cars. We discuss them in terms of passenger cars, commercial vehicles and parts. The customers of passenger car passenger vehicles are individual consumers, and the factors they care about will affect the sales volume and profitability of passenger cars. It can be seen from relevant investigations that price reduction and usage fees have the greatest impact on the purchase of cars, and we will continue to reduce prices and increase the use fees in 2006. Therefore, the overall performance of the passenger vehicle industry next year is not optimistic. As the price of small-displacement cars is generally low, there is little room for price cuts. At the same time, the increase in use costs will increase the willingness of consumers to purchase small-displacement cars. Therefore, small-displacement car manufacturers can be cautiously optimistic, and can focus on FAW Xiali (000927).
Commercial vehicles Commercial vehicles are mainly used to carry people, cargo, and trailers. Commercial vehicles are also divided into passenger cars and trucks. Its users are mainly based on companies or individuals with business as their purpose. Because of their use as production materials, profitability is the ultimate goal.
Due to the relatively full competition between trucks and buses in commercial vehicles, the level of gross profit margin is relatively low, and a slight change in gross profit margin will cause the company's earnings to fluctuate significantly. Taking into account the relatively high proportion of raw materials such as steel in its cost, a 5-10% drop in steel prices will increase gross profit margin by 1-2%. For Fukuda Motor (600166), companies with a gross profit margin of 6.7% will bring greater improvement in performance. As the proportion of the cost of steel in the bus industry is higher, the increase in gross profit margin will greatly increase its profitability. Attention can be paid to Yutong Bus (600066) and Jiangling Motors (000550).
The parts and components of the parts and components companies are different from those of the entire vehicle companies. The customers of the parts and components companies are complete vehicle companies or first- and second-tier suppliers. In the face of professional customers, the price of parts and components is almost a key factor in ensuring quality. Ordinary OEMs or first-tier suppliers will select 2-3 component companies as suppliers and use their competition to reduce procurement costs. In the case of price cuts by OEMs, it has become an inevitable choice to pass on downstream costs, and the bargaining power of parts and components companies has become a decisive factor in their performance. In the case of falling prices of raw materials such as steel, it is still relatively uncertain whether companies with weak bargaining power can benefit, and companies with strong bargaining power will benefit.
Suppliers have strong bargaining power under the following conditions:
It is dominated by a few large companies (Fuyao Glass for automotive glass) and little or no alternatives (Weifu High-Tech's fuel injection system). Suppliers' products are very important to buyers (Dongfeng Motor's Cummins engine For passenger cars or trucks, the supplier has the ability to integrate downwards (Huaxiang Torch Gearbox, Axles and Vehicles), the purchaser is not an important customer of the supplier (a company with a small purchase volume), and the supplier's product has a high value The conversion costs (companies using Sugon share axle).
From the above analysis, we can draw the following conclusions:
First, the oversupply of the entire vehicle industry, the output is greater than the sales volume, the situation that the price decline will lead to the decline of profits will still be maintained. Although the decline in the price of raw materials such as steel can bring about a reduction in costs, whether the degree of decline can offset the impact of product price cuts still requires concrete analysis.
The second is that in the buyer's market, only products that meet the needs of customers can win the competition. Passenger car users and commercial vehicle users have different value orientations. Companies that focus on customer needs and use differentiated products to meet market segmentation needs are concerned.
Thirdly, the parts and components companies face professional users, and the price has become the focus of both parties. The increase in the number of complete vehicles will inevitably lead to the growth of demand for parts and components, and there are investment opportunities for companies with strong bargaining power.
From the perspective of listed companies, we believe that we can focus on Yutong Bus (600066), Dongfeng Motor (600006), and Ningbo Dongsheng (600114).
Butterfly Valve
Wofly Technology Co., Ltd. , http://www.gd-valve.com