Access China conference highlights 2018
Yutong Bus attended our Access China Conference on 8 January. The followingare the key takeaways from investor meetings:
- Yutong sold 67,568 units of buses in 2017 (-5% YoY), including c.25k units ofnew energy (NEV) buses. Among the total NEV bus sales volume, c.90% waspublic buses. According to Yutong, it recorded over 10% YoY NEV bus volumegrowth in 4Q17. However, pricing has been trending lower in 4Q17.
- Management expects the company to achieve a 27-28% market share in NEVbus market in 2017 (33% in total bus market including conventional buses), aslight YoY increase with industry NEV bus sales declining more than 10% YoY.
- For 2018E, the company believes it will continue to outgrow the overall marketand remains positive on NEV bus sales in 1Q18 given the delay of the subsidy cut.
- The company will strive to maintain the relatively stable profitability of its NEVbuses and expects to partially mitigate the negative impact from the reduced NEVbus subsidy through raising net-subsidy selling price and supplier cost reduction(i.e. battery cost).
- Management comments that about 60% of the public transportation bus soldin 2017 were NEV buses. Despite the cuts in NEV bus subsidy in 2018-20, thecompany believes that the public transportation field would still be government’smain focus to promote the country’s vehicle electrification in future.
- Yutong believes the recently announced new subsidy policy provides greatopportunities to industry leaders with advanced technology, such as Yutong, tofurther gain market share in the NEV bus market. It has been investing in NEVfield for many years already and its NEV products offer better user experience andlower full life cycle maintenance costs compared to competitors.
Deutsche Bank view - maintain Buy on increasing contribution from NEV bus
Despite the impact on margin due to possibly lower subsidies in 2018, we believethat major NEV makers such as Yutong can probably mitigate this in the long runby lowering production costs (e.g. battery and scale effects). Maintain Buy givenour optimism on Yutong's increasing profit contribution from NEV bus segment. Our target price is based on 14x FY18E P/E (unchanged), c.30% above Yutong's mid-cycle P/E of 11x to reflect our optimism on increasing profit contribution fromthe new energy bus. Key downside risks include: 1) unexpected changes in theChinese government's new energy bus subsidy policy; 2) weaker-than-expectednew energy bus demand; and 3) market share loss in new energy buses.
- 总股本 22.14亿股
- 流通股 22.14亿股
- 每股收益 0.31元
- 每股未分配利润 4.15元
- 每股净资产 6.89元
- 净资产收益率 4.17%
- 净利润 68298.22万
- 净利润增长率 10.78%