According to the Automobile Industry Association, in December 2008, the net interest rate of key automakers fell from 3.02% in November to -0.07% in December, resulting in an industry-wide loss. The quarterly net profit rate also decreased from 5.91% in the third quarter of 2008 to 1.85% in the fourth quarter. This is the lowest point since the auto industry association announced its profits in 2002, so it can also be said that Chinese auto companies are experiencing the most difficult operating time in the past decade.
We do not rule out the possibility that the industry's net margin level will continue to bottom out in the first quarter of 2009. However, based on policy support and demand bottoming out, we estimate that the industry's net margin will begin to gradually recover at the end of the second quarter of 2009.
In January 2009, the overall production and sales of automobiles remained sluggish, but the proportion of sales of small-displacement automobiles increased significantly.
We compare the operating environment of auto companies in 2009 with that of 2008 and believe that the operating environment in 2009 will improve compared to 2008.
Regardless of the P/E ratio or the P/B ratio, we believe that the automotive sector has now reached a reasonable level and future investment opportunities will be implemented in companies with fundamental support. According to the order of demand recovery, taking into account the stimulus of the country's 4 trillion yuan investment, we first push the heavy truck sector and recommend Weichai Power, CNHTC, and CNHTC Group.
In terms of passenger vehicles, we still recommend FAW Cars, and we are optimistic about its outstanding profitability. At the same time, benefiting from purchase tax relief and new energy support, we recommend focusing on BYD. Light trucks and micro-boards are supported by the policies of the automobile to the countryside, and sales are expected to quickly pick up again after March. The beneficiaries are Foton Motors, Jiangling Motors and Changan Automobile.
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