Automobiles and Components: Looking for high-elastic varieties that oversold and rebounded heavy-duty stocks

Auto parts sector continues to be relatively resilient, and commercial truck segments continue to fall sharply

Last week, the auto parts segment rose 5.17%, auto parts rose 5.40%, the Shanghai and Shenzhen 300 index rose 5.09%, the auto vehicle outperformed the broader market by 0.08 percentage points, and auto parts outperformed the broader market by 0.31 percentage points. From the perspective of subdivisions, passenger cars and auto parts still perform best, but on Friday, the Shanghai and Shenzhen cities’ Jedi hit counterattacks on good news at home and abroad. Heavy truck stocks became the automotive and auto parts industry on Friday. Leading the plate.

The National Development and Reform Commission approved trillion-scale infrastructure investment projects, heavy-duty stocks have a short-term oversold rebound

This week, the National Development and Reform Commission approved a trillion-scale infrastructure investment project. The government's strategy for steady growth with infrastructure investment is very obvious. “Tong Gongji” was launched again, which ignited the market’s hope for a rebound in demand for construction machinery and heavy trucks. China Automobile Association has not announced the production and sales data for August, but the first commercial vehicle network disclosed that in August, heavy truck manufacturers sold a total of 37,600 heavy trucks, a 34% drop from the previous month and 3.3% from the previous month. We believe that whether sales of heavy trucks can rebound will ultimately depend on whether banks can provide enough credit to support trillion-dollar infrastructure projects. But for the stock market, prior to the implementation of bank credit, heavy-duty stocks will usher in a wave of oversold rally.

International competition of spare parts companies from foreign capital substitution to international cooperation

Three auto parts companies announced three announcements related to international cooperation this week: 1) Weichai Power spent EUR 738 million to purchase 25% of the shares of Germany's KION Group and 70% of Linde Hydraulics; 2) Ningbo Huaxiang and its German-owned company The partner Helbako GmbH jointly invested 4 million euros to set up a joint venture in Shanghai; 3) The Central Plains was assigned an order for the US general-purpose fifth-generation engine cylinder liner. We believe that in the next two years, the strategy of domestic auto parts companies will shift from foreign capital substitution to international cooperation. Independent innovation does not mean independent research and development.

Heavy-stock stocks rebound during the search for highly elastic species

In terms of individual stocks, Weichai Power, Great Wall Motors and Precision Forging Technology were among the top performers this week. In the rally on Friday, Weichai Power, Inner Mongolia Autonomous Distribution and China National Heavy Duty Truck Group ranked the top among gainers. We believe that the key to choosing the rebounding target of heavy-duty stocks in the short term is to look at the flexibility of the company's rebound. The recommended combination is China National Heavy Duty Truck, Valin Xingma and the Central Plains.

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