Investment Strategies for Automotive Parts Industry in 2012: “Slitting to Zero”

As the vehicle growth has entered a stable period, investment opportunities for parts and accessories companies have gradually become prominent.

After experiencing rapid growth in the past two years, it is generally expected that vehicle sales will return to a stable growth of around 10%. Benefiting from the market demand for exports, aftermarket maintenance, and import substitution, the spare parts industry growth is expected to continue to outperform the entire vehicle. In the context of falling raw material prices and slowing down of target sales pressure for the entire vehicle, the performance of spare parts companies is expected to exceed expectations.

After-sales service + export + import substitution, spare parts companies have broad room for growth. Overall, the growth path of spare parts companies is still very long: 1) Structural adjustments that benefit both the growth of car ownership and the proportion of benefited customers, and the demand for aftersales parts for spare parts is vast; 2) The cost advantage is better than that of developed countries. Compared with the huge annual production and sales base of the automotive industry in developing countries, the export market of parts and components companies is getting better and better; 3) On the one hand, benefiting from possible policy inclinations, the import substitution effect is further strengthened, and on the other hand downstream demand Slowing down and intensifying competition, strong independent parts and accessories companies will take the road to rise.

With the gradual decline in the cost of lithium batteries for key parts and components, the dawn of new energy vehicles for marketization is quietly approaching. At present, the cruising range of electric vehicles has been met to meet the needs of most urban consumers. With the continuous decline in the cost of power lithium batteries in the next two years, electric vehicles are expected to usher in the opportunity to replace some of the traditional cars of about 100,000 yuan. At the same time, in order to create a convenient use condition for the electric vehicle market, in recent years, the infrastructure construction such as charging stations and charging piles will grow rapidly, bringing about room for growth for related companies.

The implementation of the National IV standard brings investment opportunities. In terms of the four mainstream SCR and EGR technology options, compared with EGR technology, SCR has few changes to the existing three engines, and has low requirements for oil products. It also occupies the SCR post-processing system according to the technical plan announced by the EPA. Most of the proportions. We expect that SCR technology will be the first choice for most heavy truck companies in the initial stage of the implementation of State IV and in the short term when the oil problem cannot be solved. According to our preliminary calculations, at the initial stage of the technology upgrading of the State IV, the market size of the post-processing system is expected to reach 10 billion yuan.

Investment Strategy. Considering the current sluggish sales of whole vehicles and the expectation that the entire vehicle may continue to adjust in 2012, we still maintain the industry's “neutral” rating. Compared with the whole vehicle, it is expected that the spare parts companies will usher in greater performance elasticity, comprehensively consider the export, after-sales demand, and import substitution and market share increase indicators, and combine the certainty of growth and performance growth, we recommend focusing on the following zero Future performance of accessories companies: Halma Technology, Zhongyuan Internal Distribution, camel shares, Songzhi shares, Zhongding shares. The new energy vehicle promotion proposal is focused on Yutong Bus; Weifu Hi-Tech, which implements the proposed emission standards for China's four emission standards, focuses on the exhaust gas after-treatment system.