Matters:
The Federation of passenger cars released the narrow passenger car data in December, with an output of 2.47 million, a year-on-year increase of + 7% and a month on month increase of + 11%; Wholesale: 2.37 million, year-on-year + 2%, month on month + 10%; Retail: 2.11 million, year-on-year – 8% and month on month + 16%.
Comments:
Wholesale performance continued to be better than expected in December. In December, 2.37 million passenger cars were wholesale in a narrow sense, with a year-on-year increase of + 2% and a month on month increase of + 10%, which was better than our previous expected upper limit of 0% to + 7% month on month. It still mainly reflected the chip mitigation + vehicle enterprises’ impulse at the end of the quarter. The whole 4q21 wholesale totaled 6.49 million vehicles, with a year-on-year increase of – 2.5% and a month on month increase of + 37%, which will play a great supporting role in the recovery of 4q21 sector performance.
In December, Shanghai Insurance continued the characteristics of low prosperity, but it was better than we had expected. In December, there were 2.18 million insurance vehicles, with a year-on-year growth rate of – 15% (roughly the same as the previous two months) and a month on month growth rate of + 30%. Considering that the Spring Festival in 2022 is higher and the month on month growth rate is less than the historical range of + 33% to + 40%, it still reflects the characteristics of relatively low prosperity, dealers’ pre holiday impulse capacity (low inventory) + low demand. 10000 vehicles are replenished from the channel inventory, which is quite different from 300000-400000 vehicles in previous years. Although the overall demand kernel is average, the data in December is still better than our expectation after the draft adjustment at the end of December.
In 2022, maintain the optimistic expectation of cautious demand boom + chip boost, and it is estimated that Shanghai Insurance + 0% and wholesale + 8% year-on-year. According to the characteristics of past macroeconomic and automobile business cycles, we estimate that the downward demand state will continue in the first half of 2022 or the first three quarters. Without the positive impact of chips, the growth rate of Shanghai insurance may fall between – 10% and – 5%. However, the core shortage in 2021 will have a positive impact on the retail and batch production of the industry in 2022:
1) retail end: the negative impact of core shortage in 2021 includes the backlog of orders and failure to deliver, as well as the disappearance / delay of demand caused by price increase, the decline of dealers’ demand for orders, and the long waiting time for cars, which will become a positive impact in 2022. By extending the vehicle collection cycle by 1-2 weeks, we estimate that compared with the backlog of orders under normal conditions of about 500000-800000 vehicles, the chip recovery process will boost retail sales, accounting for about 2.5% – 4.0% of the total demand of a year, and it is estimated to boost the growth rate of Shanghai Insurance by 4.9pp-7.7pp in 2022 (with base effect). Under neutral expectations, we estimate that the year-on-year growth rate of Shanghai Insurance in 2022 will be around 0%, and the growth rates of 1-4q22 will be – 10%, – 4%, + 5% and + 9% respectively. On the one hand, it reflects the gradual increase in the number of chips after recovery, on the other hand, it reflects the gradual decline of the base in 2022. In addition, we have a certain expectation that the demand boom will hit the bottom in the second half of the year.
2) wholesale end: in the process of chip replenishment, the channel inventory will also be replenished. According to our calculation, the industry channel inventory in the 13 months from December 2020 to December 2021 has decreased by about 450000 compared with the seasonality. According to the wholesale / inventory situation from October to December 2021, the speed of chip replenishment is actually much higher than the previous market expectation, We estimate that the industry can complete the inventory replenishment to the normal state in 2-3q22, with about 450000 vehicles, accounting for about 2.1% of the total wholesale in a year, which is estimated to boost the wholesale growth rate of 4.4pp in 2022. Under neutral expectations, we estimate that the year-on-year growth rate of wholesale in 2022 will be around 8%, and that of 1-4q22 will be + 13%, + 11%, + 12% and – 1% respectively. In addition, it should be noted that the inventory accommodation elasticity of industries and manufacturers is still great, so the wholesale may exceed expectations. If the wholesale is + 8% year-on-year, the performance growth of the parts sector may reach 30%. Although retail is average, the profitability of auto parts enterprises will beat many other industries.
Investment suggestion: we are firmly optimistic about the rising comparative advantage of China’s automobile manufacturing industry in the world, which will bring sustained growth to complete vehicles and parts. At present, the passenger car sector mainly reflects the downturn of market risk preference. The adjustment of 4q21-1q22 has brought good configuration opportunities to the core targets. In particular, at present, the performance price ratio of Hong Kong stock Great Wall Geely has been highlighted. It is recommended to configure the catalytic opportunities for car companies to release new car verification growth logic before and after the Beijing auto show in April, and recommend Geely, Byd Company Limited(002594) , great wall and SAIC. In the parts sector, beta brings industrial configuration value and drives the market to further look for alpha opportunities with changes. In 2022, we are expected to see a double rise in performance, changes and valuation. It is recommended to pay attention to Ningbo Jifeng Auto Parts Co.Ltd(603997) , Suzhou Sonavox Electronics Co.Ltd(688533) , Lizhong Sitong Light Alloys Group Co.Ltd(300428) , Jiangsu Changshu Automotive Trim Group Co.Ltd(603035) , and recommend Ningbo Tuopu Group Co.Ltd(601689) , Chengdu Haoneng Technology Co.Ltd(603809) , Wuxi Best Precision Machinery Co.Ltd(300580) , Jiangsu Pacific Precision Forging Co.Ltd(300258) , Ikd Co.Ltd(600933) .
Risk tips: the macro economy and China’s consumption are lower than expected, the price rise of raw materials is higher than expected, and the recovery speed of chip supply is lower than expected.
