中国乘用车展望：需求将在即时刺激下触底

1、ResearchAnalystsBinWang852 21016702 HYPERLINK mailto:bin.wang NickLi852 21016704 HYPERLINK mailto:nick.li.3 CarrieJiang852 2101672317 January 2019 Asia EquityResearchAutomobiles &ComponentsChina Passenger Vehicles SectorFORECAST CHANGEFORECAST CHANGE2019 Outlook: Demand to bottom out on immediate st

2、imulusFigure 1: Chinese passenger vehicles demand growthoutlook HYPERLINK mailto:carrie.jiang Wei Fang852 21016710 HYPERLINK mailto:wei.fang 30Unit mn 47.2%Unit mn 47.2%24242534.4%24232016181417.6%11127.2%688.4%11.7%19.5%12.7%9.1%4.9%2.6%-3.8%1.0%201510502008 2009 2010 2011 2012 2013 2014 2015 2016

3、2017 2018 2019e 2020eTotal passenger vehicle salesYoY55%45%35%25%15%5%-5%-15%Source: CAAM, Credit Suisse estimates Note: the yellow bars are the first years of stimulus policies releaseAuto stimulus likely to surprise on the upside, not just boost rural demand/NEVs. Ning Jizhe, deputy head of Nation

4、al Development and Reform Commission (NDRC), said last week they will boost car consumption by supporting rural consumption and new energy vehicles (NEVs). We expect the government to take other more powerful measures in 1Q19, like easing purchase quota control in some regions, phasing out polluting

5、 cars, and tax reduction (value-added tax and purchase tax). Thus we forecast passenger vehicle (PV) demand growth to bottom out from 4Q18s -15% and return to +5% YoY in 2019, above consensus flatYoY.Prefer component makers to car makers. We expect both components and car makers to benefit from the

6、stimulus policies, but we prefer the components sector. Thats because car makers are likely to be negatively impacted by other upcoming polices, including (1) earlier implementation of emission standard upgrade in some regions, and (2) NEV government subsidy reduction (down 50%YoY).In car-makers, we

7、 prefer private local brands over JV-partners. Chinese partners in Sino-foreign joint-ventures (JVs) are likely to face downward pricing pressure, as import vehicle tariff rate might drop from the current 15% to below 10%. Selling price of competing imported vehicle products might be lowered by pass

8、ing on tariff-cut gains. Also, 2019 may see more JVs stake transfer to foreign partners, after Brilliances 25% stake drop in BMW JV in2018.Pecking order: Huayu Minth Great Wall Geely BYD GAC Dongfeng Brilliance BAIC SAIC Changan Auto. We like components makers better volume on stimulus, falling raw

9、material prices, potential export tariff drop. We upgrade Geely to OUTPERFORM and downgrade BAIC to NEUTRAL. We have OUTPERFORM on Huayu, Minth, GWM, Geely, BYD, and GAC. We rate DFM, BCA, BAIC, SAIC at NEUTRAL and maintain UNDERPERFORM on ChanganAuto.DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT C

10、ONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Creditto do in its As a be the a of of as a in Focus charts and tablesFigure 2: Chinese auto ownership (vehicle on the road, or car PARC) by emissionstandardFigure 3: Car

11、plate restriction in nine cities and provincesProbability of getting a car plateSource: Ministry ofenvironmentalprotectionSource: Company data,MIIT0.1%Beijing4.5%Shanghai0.8%Tianjin0.8%Shenzhen1.5%Guangzhou0.9%HangzhouOn 1st July 2005, China 2 emission standard started implementation across the coun

12、tryOn 1st July 2011, China 4 emission standard started implementation across the countryCertain cities and provinces targeted to early implement China 6 emission standard since 1st July 2019The official implementation date of China 6b emission standard is 1st July 2023.On 1st July 2005, China 2 emis

13、sion standard started implementation across the countryOn 1st July 2011, China 4 emission standard started implementation across the countryCertain cities and provinces targeted to early implement China 6 emission standard since 1st July 2019The official implementation date of China 6b emission stan

14、dard is 1st July 2023.1H052H05 1H062H061H07 2H071H112H1120171H192H191H202H201H232H23On 1st July 2007, China 3 emission standard started implementation across the countryStarting from 1 Jan 2017, China implemented China 5 emission standard for all new car import, sales, and registrationThe official C

15、hina 6a emission standard is scheduled to start implementation since 1st July 2020Source: Company data, Credit Suisse estimatesFigure 5: ValuationcomparisonCompany NameRatingCSTickerReutersUpside tolastes closeCSClose16-JanMarket Cap Currency(US$ Local2019P/E2020P/B (x)20192020Huayu autoOUTPERFORM60

16、0741.SS56%30.019.38,976CNY1.1MinthOUTPERFORM0425.HK29%36.528.34,135HKD12.3Great Wall Motor Co LtdOUTPERFORM2333.HK20%6.25.27,488HKD0.7Geely Automobile Holdings LtdOUTPERFORM0175.HK22%14.011.513,190HKD8.0Byd Co LtdOUTPERFORM1211.HK26%58.046.118,491HKD39.8Guangzhou AutoOUTPERFORM2238.HK22%10.28.414,13

17、7HKD5.85.00.90.8Dongfeng Motor Group Co LtdNEUTRAL0489.HK7%8.27.78,403HKD0.4BAIC Motor Corp LtdNEUTRAL1958.HK13%5.34.74,792HKD0.6Brilliance China Automotive HoldinNEUTRAL1114.HK11%7.56.84,354HKD0.7SAIC Corp NEUTRAL600104.SS0%25.525.543,953CNY1.1Chongqing Changan Automobile UNDERPERFORM000625.SZ-20%6

18、.07.54,301CNY10.0simple Avg.1.0market cap weighted Avg.12.3Source: Company data, Credit Suisse estimatesWe expect the governmenttotakemorepowerful measures in1Q19.Weprefercomponentssector as carmakersarelikely tobe negatively impacted byotherupcoming unfavorablepolices.More auto-JVsstaketransfer to

19、foreign partnershappen in2019.As theupcomingstimuluspolicies will notonlydrive demand growthbottoming out from 4Q18s 15% YoY,butalsoboost overallsentimenton auto stocks, weexpecta sector-wide rallyahead.Demand to bottom out on immediate stimulusAuto stimulus likely to surprise on the upside, not jus

20、t boost rural demand and NEVsMr. Ning Jizhe, deputy head of NDRC, in a recent interview with China Central Television, said that they will take measures in 2019 to boost car consumption and help the economy. He said the government will support reasonable, green and upgrading car consumption, and con

21、sider launching policies to encourage rural auto consumption. This shows that the Chinese government plans to boost economic growth by stimulating consumption, given the auto sectors importance. Besides these regulatory movements, we expect the government to take other more powerful measures in 1Q19

22、, like easing purchase quota control in some regions, phasing out polluting cars, and tax reduction (VAT and purchase tax). Thus we forecast PV demand growth to bottom out from 4Q18s 15% drop and return to 5% YoY rise in 2019, which is well above consensus flat YoY growth forecast.Prefer component m

23、akers to car makersWe expect both components makers and car makers to benefit from the stimulus, but we prefer the components sector as car makers are likely to be negatively impacted by other upcoming unfavourable polices. These policies include (1) earlier implementation of emission standard upgra

24、de in some regions, by 1 July 2019, which is a year earlier and may cause supply issues in 2H19 and Rmb2,000/unit higher parts cost, and (2) NEV subsidy reduction, like -50% YoY due to limited budget and bigger-than-expected subsidy- eligible NEV volume. On the contrary, parts makers will not only s

25、ee volume growth on the stimulus but also their per-car content value will rise due to emission standard upgrade.Prefer locals to JV-partners in car makersIn car makers, we prefer private local brands (like Great Wall, Geely, BYD) to JV partners (like Dongfeng, SAIC, BAIC, Brilliance). Chinese partn

26、ers in Sino-foreign JVs are likely to face pricing pressures as import vehicle tariff rate might drop from 15% (current) to below 10%. Then competing imported vehicle products might pass on tariff-cut gains to lower their selling prices. Meanwhile, more auto-JVs stake transfer to foreign partners ma

27、y happen in 2019, after Brilliance transferring its 25% stake to BMW in China JVs in 2018.Pecking order: Huayu Minth Great Wall Geely BYD GAC Dongfeng Brilliance BAIC SAIC ChanganAs the stimulus policies will not only drive demand growth bottoming out from 4Q18s 15% YoY, but also boost the overall s

28、entiment on auto stocks, we expect a sector-wide rally ahead. Between auto makers and parts makers, we prefer parts, as (1) parts could see bigger price drops in raw materials (like steel and rubber), (b) the risk of further tariff increase for US exports is removed, and (c) theres no exposure to JV

29、 stake change. In auto makers, we prefer Chinese local brands to Chinese partners in Sino-foreign JVs, due to the risk of further reduction in import vehicle tariff and drop in investment income from its Sino-foreign auto-JVs stake transfer. We have OUTPERFORM on Huayu, Minth, GWM, Geely, BYD, GAC,

30、after upgrading Geely to OUTPERFORM. We rate DFM, BCA, BAIC, SAIC NEUTRAL, after downgrading BAIC to NEUTRAL. We stay UNDERPERFORM on ChanganAuto.Table of contents HYPERLINK l _bookmark0 2019 Outlook: Demand to bottom out onimmediatestimulus1 HYPERLINK l _bookmark1 Focus chartsandtables2 HYPERLINK l

31、 _bookmark2 Demand to bottom out onimmediatestimulus3 HYPERLINK l _bookmark3 Auto stimulus likely to surprise on the upside not just boost rural demand and HYPERLINK l _bookmark3 NEVs5 HYPERLINK l _bookmark4 Prefer component makers tocarmakers9 HYPERLINK l _bookmark5 Prefer locals to JV-partners inc

32、armakers11 HYPERLINK l _bookmark6 Pecking order: Huayu Minth Great Wall Geely BYD GAC Dongfeng HYPERLINK l _bookmark6 Brilliance BAIC SAIC ChanganAuto HYPERLINK l _bookmark7 Huayu Automotive Systems Co., Ltd (600741.SS /600741CH)14 HYPERLINK l _bookmark8 Minth Group Limited (0425.HK /425HK)16 HYPERL

33、INK l _bookmark9 Great Wall Motor (2333.HK /2333HK)18 HYPERLINK l _TOC_250001 Return to growth in 2019, thanks tostimuluspolices18 HYPERLINK l _bookmark10 Geely Automobile Holdings Ltd (0175.HK /175HK)20 HYPERLINK l _bookmark11 BYD Co Ltd (1211.HK /1211HK)22 HYPERLINK l _bookmark12 Guangzhou Automob

34、ile Group (2238.HK /2238HK)24 HYPERLINK l _bookmark13 Dongfeng Motor Group Company Limited (0489.HK /489HK)26 HYPERLINK l _bookmark14 Brilliance China Automotive Holdings Limited (1114.HK /1114HK)28 HYPERLINK l _TOC_250000 Further tariff cut to hurt BMWJVmargin28 HYPERLINK l _bookmark15 BAIC Motor C

35、orporation Limited (1958.HK /1958HK)30 HYPERLINK l _bookmark16 SAIC Motor Corp Ltd (600104.SS /600104CH)32 HYPERLINK l _bookmark17 Chongqing Changan Automobile Company Limited (000625.SZ /000625CH)34Auto stimulus likely to surprise on the upside not just boost rural demand and NEVsMr. Ning Jizhe, de

36、puty head of NDRC, in a recent interview with China Central Television, said that they will take measures in 2019 to boost car consumption and help the economy. He said the government will support reasonable, green and upgrading car consumption, and consider launching policies to encourage rural aut

37、o consumption. This shows that the Chinese government plans to boost economic growth by stimulating consumption, given the auto sectors importance. The auto industry is a significant contributor to Chinas GDP (4%), employment (4.7 mn workers), taxation (4.5%), and national retail sales (25%).Besides

38、 these regulatory movements, we expect the government to take other more powerful measures in 1Q19, like easing purchase quota control in some regions, phasing out polluting cars, and tax reduction (VAT and purchase tax). Thus we forecast PV demand growth to bottom out from 4Q18s 15% drop and return

39、 to 5% YoY rise in 2019, which is well above consensus flat YoY growthforecast.Figure 6: Chinese PV sales growth vs. autostimulusUnit mn47%23.6Unit mn47%23.624.224.4 24.734%23.220.018.416.313.618%11.312.219%7% 8.412%13%9%3%5%5.78%-4%1%2545%2025%1515%105-5%02008 2009 2010 2011 2012 2013 2014 2015 201

40、6 2017 2018e 2019e 2020eTotal passengervehiclesalesYoY-15%Source: Company data, Credit Suisse estimatesNote: Yellow bars are the years with auto stimulus policiesChina has already implemented two rounds stimulus programs for the auto sector, reducing vehicle purchase tax rate from 10% to 5%.From mid

41、-2008 to early-2009, China PV sales became sluggish after the global financial crisis. from August 2008 to January 2009, vehicle wholesales recorded - 6.6%/-3%/11.7%/-11.2%/-7.2%/-12.3% YoY growth. In January 2009, the State Council of China announced its Plan on Adjusting and Revitalizing the Auto

42、Industry document, which specified that vehicle purchase tax cut from 10% to 5% applies to vehicles with engine size 1.6 l. In March 2009, the government also invested Rmb6 bn to stimulate auto demand in rural areas and accelerate the disposal of aged vehicles. After the stimulation in 2009, new car

43、 wholesales YoY growth jumped to 47.2% YoY in 2009 from only 7.2% YoY growth in2008.Over June-August 2015, China PV sales faced continuous three-month YoY decline down 1.8%/5.9%/1.5%. It was the first YoY decline since January 2009, excluding the Chinese New Year festival impact. The Ministry of Fin

44、ance and State Administration of Taxation jointly announced the Notification of vehicle purchase tax cut for vehicleswith1.6 litre engine size. The government cut vehicle purchase tax again from 10% to 5% for vehicles with 1.6 l engine size. In this round of stimulation, new-car wholesales YoY growt

45、h was 17.6% in 2016.In September 2018, the State Council had announced guidelines to stimulate consumption via removing inter-city transaction control for used cars, maintaining NEV purchase tax exemption and cash subsidy, constructing more NEV charging facility and vehicle parking facilities, encou

46、raging rural auto consumption. This was followed by above-mentioned NDRC deputy heads recent remark on supporting reasonable, green and upgrading car consumption, and consider launching policies to encourage rural auto consumption. We think these measures will not be able to meaningfully boost auto

47、demand in 2019, and we expect the government to launch other more impactful policies like easing purchase quota control in some regions, phasing off polluting cars, and further tax reduction (VAT and vehicle purchase tax).Auto demand stagnated in 2017 and 2018After a magnificent year in 2016, on fav

48、ourable policy, Chinas PV sector slipped into a downturn in 2017, with worsening volume growth, edging up 2.6% YoY in 2017 and down 3.8% YoY in 2018. Key change was the negative policyvehicle purchase tax for smaller car (engine below 1.6 l) increased from 2016s 5% to 7.5%/10% in 2017/2018, not only

49、 triggering notable front-loading demand in 4Q16 and 4Q17, but also rising car buyers payment on the higher tax rate.Meanwhile, overall consumer willingness to spend money, especially for big-ticket consumer discretionaries like new cars, stagnated in 2017 and 2018 due to high-level household gear r

50、atio. Chinese household gear ratio (household credit as percentage of GDP) is likely to exceed 50% in 2018, after 20 years of continuous increase, mainly due to the rising property-related loans. More importantly, recent years gear ratio increases were contributed by lower-tier areas which contribut

51、ed most auto demand growth given their lower auto penetration. In other words, people in lower-tier areas had postponed their auto demand and shifted the same amount of money as property downpayment.Figure 7: Chinese household gearratiotrendFigure 8: Quarterly PV salesgrowth60%50%40%30%20%10%1Q 3Q 1

52、Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q08 08 09 09 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 1801Q- 2Q- 3Q- 4Q- 1Q- 2Q- 3Q- 4Q- 1Q- 2Q- 3Q- 4Q-40%000 Unit31%000 Unit31%15%18%9%5%8%6%4%0%0%-8%-15%20%10%0%-10%-20%Household credit as % of GDP16 1616 16 17 1717 1718 1818 18Total Pa

53、ssenger Vehicle SalesSales growth YoYSource: CAAM, CreditSuisseestimatesSource: CAAM, Credit SuisseestimatesTo ease purchase quota control in some regionsDue to severe traffic congestion and air pollution, certain areas (including Beijing, Shanghai, Shenzhen, Hangzhou, Guangzhou, Tianjin, Shijiazhua

54、ng, Guiyang, and Hainan provinces) controlled the internal combustion engine (ICE) vehicle purchase via restricting annual car plate numbers. The probability of obtaining car plates in these areas is very low, currently. The total number of car plate applicants from these areas reached 6.1 mn by end

55、-2017, representing a huge unmet demand for car ownership. These people could be prospective car buyers given if there is no limitation on plates. Thus we expect easing purchase quota control in some regions, if there are any, in 2019, to create single-digit- percentage incremental growth in new car

56、sales.Figure 9: Car plate restriction in nine cities andprovincesProbability of getting a car plate0.1%Beijing4.5%ShanghaiTianjin0.8%Shenzhen1.5%Guangzhou0.9%HangzhouSource: Company data, MIITTo phase out heavily polluting PVsThe Chinese government could also announce certain policies to phase out h

57、eavily polluting PVs. The government launched the “campaign to reduce diesel truck population” in January 2019 and target to phase out 1 mn China 3 Emission Standard diesel trucks by end-2020 through cash subsidies and restricting road right. If the government implements similar policies for PVs, mo

58、re than 10% of PV demand would be stimulated in 2019.The vehicle scrappage program was implemented during the global financial crisis ten years ago. In July 2009, the Ministry of Finance, together with other nine government departments, announced the “Measures for the administration of Automobile Re

59、placement” document. The document highlighted that car owners could receive cash subsidy if they disposed the yellow-label (below China 1 Emission Standard) vehicles to certified auto-products recycling companies and buy newvehicle.There were 19 mn vehicles with China 2 (or below), Emission Standard

60、 on road as of end- 2017, which is estimated to have reduced to 15 mn by end-2018. These vehicles were more than 11 years old when the Emission Standard was upgraded from China 2 to China 3 (on 1 July 2007). The combined number of vehicles with China 2 or below and China 3 Emission Standards on road