Summary
· It is absolutely a definite event that the growth of China auto market will slow down, and the yearly auto sales in 2012 is predicted to increase by nearly 7%. However, we believe that, the burst of structural demand ( eg, SUV demand ), the consumption upgrading trend and the popularization period of 3rd, 4th and 5th tier cities will bring about opportunities to some specific segment market of Chinese auto industry. Concerned strong enterprises still has space for fast growth.
· The fast growth period of SUV will last for 2 to 3 years more, then to enter the mature period with stable growth. From the price, 200-250 thousand's car models are the main force of growth. Meanwhile, taking into consideration a proportion of needs for first car buying in non-first-tier city, the mid-and-low price market of 80-100 thousand is estimated to be quite prosperous.
· The bottoming-out of the heavy truck industry is hopeful in H2 2012, but the whole dramatic reversal won`t be very possible, complete recovery still necessary to be waited.
· The winners and losers point among auto enterprises gradually become obvious, and the investment chance in auto share will display structural features. Our investment logic mainly recommend: 1. Companies with strong affirmation of the performance growth; 2. Those companies whose performance possibly bottom out and rebound; 3. Companies benefiting from relative policies, such as Great Wall Motor (2333 HK), Dongfeng (489 HK) and GAC Group (2238HK).
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