Recently, the government rolled out the stimulus plan in auto industry, details mainly include: To develop auto consumption and support merger & restructuring of large-sized auto enterprises; to favor technical innovation & alteration and new-energy automobile as well as development of auto component; to back the self-owned brand and consummate auto consumption credit mechanism. Wide coverage of the policy is helpful to the fast sliding auto industry.
Given current low position of macro economy and comparatively big cardinal number of the auto industry in 1H2008, we remain our forecast that sales volume of the sector will be low firstly and then raise up in the latter period. Year-on-year negative growth is quite probable in 1H2009; additionally, consumers will be likely to wait and see before relevant plans and policies rolled out since they are much expected towards the vehicle purchase tax cut and relevant preferences. We predict that there will be short-term concentrating consumption after the policies issuance; auto sales volume might rapidly increase in February and March 2009. Attentions should be paid to extensive growth. FAW is more likely to go public wholly. As an industrial bellwether, it is of prominence in scales of earning and profit, thus going public will be of benefit.
To focus on influence of the Rmb4tn stimulus package on heavy truck industry. It is predicted that the sector will rebound in Q2 2009. Projects are to be kicked off and investment will be gradually in place after the spring festival, thus demand of heavy trucks will be effectively triggered. We suggest investors give priorities to relevant listed companies such as CNHTC Jinan Truck (000951), Weichai Power (000338) and Jiangling Motors Corporation (000550), a beneficiary of low-speed car generalization & agricultural cyclecar substitution policy.