Event overview:
According to the data of China Automobile Association, the sales volume of motorcycles was 25.04 million + 2.08 million, which was higher than that of China Automobile Association in March 2023. From January to April, a total of 119500 vehicles were sold, a year-on-year increase of + 40.5%.
Analysis and judgment:
Industry: the epidemic affects the supply, and the performance of large platoon is better than that of the industry
China’s epidemic affected supply, and the production and sales of motorcycles fell month on month in April. Affected by the obstruction of supply chain and logistics caused by the multi-point spread of local epidemic in China, in April 2022, the production and sales of motorcycles in the whole industry were 1325200 and 1392200 respectively, with a year-on-year increase of – 31.1% and – 26.2% respectively, and a month-on-month increase of – 18.0% and – 12.3% respectively. The overall production and sales of mainstream motorcycle manufacturers (Chunfeng, Qianjiang, Longxin, Dachangjiang, Zongshen, etc.) declined to varying degrees.
Motorcycle manufacturers are strategically inclined, and the performance of medium and large platoons is better than that of the industry. According to the data of China Automobile Association, in April 2022, the production and sales of 250cc + medium and large displacement motorcycles in China completed 31100 and 38000 respectively, with a year-on-year increase of + 1.1% and + 20.5% respectively, and a month on month increase of + 1.3% and + 14.3% respectively. In terms of output, it increased slightly month on month. We judge that the main reason behind this is that motorcycle manufacturers give priority to the available parts to medium and large displacement models with higher gross profit margin when the supply chain is blocked. In terms of sales volume, the monthly sales of 38000 vehicles is the best performance in a single month in history, reflecting the high prosperity of medium and large displacement motorcycles. Since May, with the warmer weather and the slowing down of the epidemic, the monthly sales are expected to further increase.
It is estimated that the growth rate of medium and large platoons will be about 40% in 2022, and the annual sales volume will reach 400000 + vehicles. Structurally, 250cc (excluding) – 400cc is still the main force of 250cc + sales, but the displacement section of 400cc (excluding) – 750cc has increased rapidly, becoming the main driving force to drive 250cc + sales, which partly reflects the demand of motorcycle players to upgrade their displacement. With the further formation of China’s motorcycle culture, the release of the upgrading and replacement demand of emerging consumer groups and the marginal improvement of the policy of banning and restricting motorcycles, we expect the growth rate of the industry to be about 40% in 2022, reaching the sales volume of 400000 + motorcycles in the whole year, and continue to recommend medium and large displacement motorcycle tracks.
Spring breeze: disturbance factors improve and potential profit elasticity is abundant
Two wheeled motorcycles: according to the data of China Automobile Association, in April, the sales volume of more than 250cc was 2200, with a year-on-year increase of + 14.5% and a month-on-month increase of – 61.0%. From January to April, the cumulative sales volume was 15800, with a year-on-year increase of + 116.0%. Since 250cc is the main sales force of the company, if it is expanded to 250cc (inclusive) and above, the sales volume in April is 60000, with a year-on-year increase of – 33.7% and a month on month increase of – 46.6%. The cumulative sales from January to April are 29400, with a year-on-year increase of + 10.3%. Generally speaking, the performance in April was weaker than that of the industry. We judged that the main reason was that the company’s motorcycle products were mainly medium and large displacement. Compared with Qianjiang, Longxin and other motorcycle manufacturers with synchronous layout of small displacement, they had relatively less space to deploy in response to the supply of the epidemic, rather than due to the weakening of their competitiveness. With the improvement of the follow-up epidemic situation, it is expected that it will be recovered gradually from late May to June. Two rounds of spring breeze recommendations in 2022 focus on the increment of 450sr new cars and exports:
1) domestic sales: the pre-sale of the imitation race new car 450sr was opened in early April, which was compared with the standard of Kawasaki Ninja 400. The market feedback was positive and the model was probably popular;
2) export: in 2021 and January April 2022, the export of 250cc (including) and above vehicles will be 23300 and 10900 respectively, with a year-on-year increase of + 227% and + 179% respectively, gradually forming two new growth poles overseas.
Four wheeled beach vehicles: according to the data of China Automobile Association, 10900 vehicles were exported in April, with a year-on-year increase of – 12.5% and a month-on-month increase of – 29.8%. A total of 48800 vehicles were exported from January to April, with a year-on-year increase of + 12.1%. Considering that the Thai plant of the company was put into operation in 2021, but not included in the sales volume of China Automobile Association, it is expected that the actual export of the company in four rounds in April will be about 13000. The month on month decline is still mainly affected by supply, and the demand side remains strong. Disturbance factors have improved significantly since 2022q2, with abundant potential profit elasticity:
1) tariff: US President Biden said on May 10 that some tariffs on Chinese imports may be cancelled in the future, and the tariff exemption is expected to increase;
2) exchange rate: the RMB depreciates rapidly. As of May 17, 2022, the exchange rate of the US dollar against the RMB has increased to 6.7. According to our calculation, every 0.1 increase in the exchange rate of the US dollar is expected to increase the profit of 2022 by 90 million yuan;
3) freight: the impact of the global covid-19 epidemic is slowing down, and the port turnover efficiency is improved. According to the CCFI index, the sea freight has shown a downward trend since mid February 2022.
Qianjiang: continue to expand product pedigree channels and comprehensively upgrade R & D cooperation
According to the data of China Automobile Association, in April, the sales volume of more than 250cc was 12100, with a year-on-year increase of + 30.7% and a month on month increase of + 24.0%, which was better than the industry. From January to April, the cumulative sales volume was 30900, with a year-on-year increase of + 36.8%. Since the second half of 2021, the company has continued to expand its product pedigree and ushered in a new round of product cycle: 1) the performance of four cylinder imitation race 600 has continued to be excellent; 2) Race 350, race 250 and flash 300s support entry-level displacement.
Channels, R & D and cooperation have been comprehensively upgraded. 1) Channel: deepen the reform of Benelli and qjiang channel direct marketing mode, and focus on promoting the restructuring of Beijing, Anhui, Jiangsu, Shanghai, Shaanxi and Guangdong after Yunnan, Guangxi, Zhejiang and Fujian; 2) R & D: Zhejiang Qianjiang Motorcycle Co.Ltd(000913) Shanghai company officially opened at the end of November 2021 and set up three centers of new energy R & D, industrial design and international foreign trade, which is expected to improve the company’s model appearance and forward-looking technology R & D capability; 3) Cooperation: on December 8, 2021, the company and Harley joint venture (Zhejiang Jisheng locomotive) officially completed the registration and accelerated the mass production and landing of target motorcycles (338cc displacement, 500cc displacement and motorcycles agreed in writing by both parties).
Others: Loncin Motor Co.Ltd(603766) following Honda, the share is relatively stable
Loncin Motor Co.Ltd(603766) : according to the data of China Automobile Association, the sales volume of more than 250cc in April was 4900, with a year-on-year increase of – 24.0% and a month on month increase of + 19.6%. The cumulative sales from January to April was 17100, with a year-on-year increase of + 0.7%. Together with Chunfeng and Qianjiang, we built the first echelon of independent motorcycle enterprises. On March 18, 2022, the luxury flagship pedal Sr4 max of limitless brand officially came into the market (350CC large pedal), and the upgraded 350ac of 300ac was launched. At this stage, there is a high explosion potential
Overseas exports continued to increase rapidly. Since 2021, with the company’s overseas channel development, the export of 250cc + straddle models has ushered in explosive growth. According to the data of China Automobile Association, the export sales of 250cc + straddle models were 23700 and 8900 respectively in 2021 and January April 2022, up to + 435% and + 55% respectively year-on-year.
Five books & new books: according to the data of China Automobile Association, the sales volume of five books above 250cc in April was 2100, with a chain comparison of – 15.1%, and the cumulative sales from January to April was 7200; In April, the sales volume of more than 250cc was 0900, with a month on month ratio of – 50.9%. From January to April, the cumulative sales volume was 5500. Since the stable shipment in May 2021, Honda’s share has basically maintained a range of 10-20%. For Honda’s domestic impact, we still continue our previous judgment, that is, the short-term impact on the independent brand is relatively limited, mainly due to the differences in the price and positioning of the two, but in the medium and long term, whether the independent brand can improve the brand and quality control will become the key to competition.
Investment advice
The current development stage of medium and large displacement motorcycles is similar to the SUV sector from 2013 to 2014. The launch of new models and new brands by the supply end vehicle enterprises accelerates, provides the core driving force for the development of the industry, and the market expands rapidly. Referring to the development history of Chinese automobile and the competition pattern of overseas motorcycle market, independent brands are expected to become the biggest beneficiaries of the rise of demand for medium and large displacement motorcycles. It is recommended that [ Zhejiang Cfmoto Power Co.Ltd(603129) , Zhejiang Qianjiang Motorcycle Co.Ltd(000913) , Chongqing Zongshen Power Machinery Co.Ltd(001696) ], and the relevant beneficiary object [ Loncin Motor Co.Ltd(603766) ].
Risk tips
The tightening of motorcycle ban and restriction policies has led to the decline of motorcycle demand in China; The introduction of a large number of new models of foreign brands has led to intensified market competition; Covid-19 outbreak short-term impact on Supply
