GF Securities: Domestic heavy truck sales in February saw a significant year-on-year increase, while export growth slowed down.

GF SEC released a research report stating that according to the China Association of Automobile Manufacturers, the wholesale sales of heavy trucks in February were 81,000 units, an increase of 36.1% year-on-year and 12.7% month-on-month. According to compulsory insurance, the terminal sales of heavy trucks in February were 48,000 units, an increase of 81.9% year-on-year and 43.0% month-on-month. According to the General Administration of Customs, the export of heavy trucks in February was 22,000 units, an increase of 13.6% year-on-year and a decrease of 5.9% month-on-month. The terminal sales of heavy trucks in February saw a high year-on-year growth, mainly due to lower base figures from the previous year and the stimulus of the replacement policy for old vehicles. The current heavy truck industry is still at the beginning of an upward cycle, with the 25-year old-for-new subsidy policy expanding to National IV and natural gas vehicles expected to boost domestic sales back to average levels. Although the export growth of heavy trucks slowed down temporarily in February, the overseas market space is vast. GF SEC's main points are as follows: Sales: In February, the year-on-year growth rates for wholesale, terminal, and export sales of heavy trucks were 36.1%, 81.9%, and 13.6% respectively. According to the China Association of Automobile Manufacturers, the wholesale sales of heavy trucks in February were 81,000 units, an increase of 36.1% year-on-year and 12.7% month-on-month. The cumulative wholesale sales of heavy trucks in January and February of the 25-year period were 154,000 units, a decrease of 2.0% year-on-year. According to compulsory insurance, the terminal sales of heavy trucks in February were 48,000 units, an increase of 81.9% year-on-year and 43.0% month-on-month. The cumulative terminal sales of heavy trucks from January to February of the 25-year period were 82,000 units, an increase of 35.6% year-on-year. According to the General Administration of Customs, the export of heavy trucks in February was 22,000 units, an increase of 13.6% year-on-year and a decrease of 5.9% month-on-month. The cumulative export of heavy trucks from January to February of the 25-year period was 45,000 units, an increase of 0.2% year-on-year. It is expected that the domestic sales of the heavy truck industry in the 25-year period will have an elasticity of about 12%-40%. The current performance of domestic sales of heavy trucks in January and February is within expectations. According to compulsory insurance, the cumulative terminal sales of heavy trucks from January to February were 82,000 units. Based on normal seasonal annualization, the estimated annual domestic sales of the heavy truck industry are expected to be 791,000 units, an increase of 31.3% year-on-year. Inventory: Inventory is in a healthy position. According to the Chamber of Commerce, by the end of February in the 25-year period, the total inventory of the heavy truck industry was 140,000 units, a decrease of 23,000 units year-on-year and an increase of 13,000 units month-on-month. The dynamic inventory-to-sales ratio (total inventory for the month/rolling average of wholesale sales for the past 3 months) was 1.9, within a reasonable range. Demand: Logistics demand has recovered since the beginning of the 25-year period. According to the National Bureau of Statistics, the accumulated year-on-year growth rate of road freight turnover in January and February of the 25-year period was 6.3%. Market Share: According to the China Association of Automobile Manufacturers, the cumulative market share of wholesale sales for FAW Group, Shaanxi Heavy Duty Automobile, and Beiqi Foton Motor in January and February of the 25-year period increased by +1.1%, +2.2%, and +3.8% year-on-year respectively. According to compulsory insurance, the cumulative market share of terminal sales for FAW Group and Shaanxi Automobile Group increased by +1.6% and +1.7% year-on-year. According to the China Association of Automobile Manufacturers, the cumulative market share of exports for Shaanxi Automobile Group and Beiqi Foton Motor increased by +1.8% and +3.1% year-on-year. Investment Advice: The heavy truck industry is still at the beginning of an upward cycle, with the expansion of the old-for-new subsidy policy to National IV and natural gas vehicles expected to boost domestic sales back to average levels. Although export growth is temporarily slowing down, the overseas market space is vast. Considering that truck stocks are currently undervalued, future profits are expected to follow the trend of increasing sales. The investment value of truck stocks has not been fully explored. Recommended vehicle products include Alpha, Sinotruk Jinan Truck (000951.SZ) with impressive export performance, Beiqi Foton Motor (600166.SH), FAW Jiefang Group (000800.SZ); recommended components include Weichai Power (000338.SZ, 02338) with leading international strategy, Weifu High-Technology Group with low valuation and stable profitability and dividends, and Tianrun Industry Technology (002283.SZ) with expansion and internationalization strategies. Risk Warning: Declining industry prosperity; rising raw material prices; intensifying industry competition, etc.