Maintain "Buy" and a TP of HK$25.00. Considering 1) SInotruk’s (the “Company”) domestic business is recovering and its market share is continuously improving; 2) the domestic sales of new energy HDTs are booming; 3) the central government's policy of "trade-in for new" continuously stimulates sales in end-market, we estimate that Sinotruk’s EPS in 2025F-2027F to be RMB2.639/ RMB3.039/ RMB3.432, with a TP of HK$25.00, corresponding to 8.3x 2025F PER.
HDT sales recorded both sales volume (SV) and ASP rising, achieving good results in cost reduction and efficiency improvement. Sinotruk's 2024 HDT sales continue to grow steadily, with a top-line of RMB95.1 bn, up 11.2% yoy; meanwhile, its GPM dropped by 0.2 ppts yoy to 15.6%. Sinotruk's administrative expenses to total revenue dropped 0.3 ppts to 5.2%; benefiting from Sinotruk's increased efforts to reduce costs and increase efficiency, its selling expenses to total revenue in 2024 also decreased by 0.3 ppts to 3.6%. In 2024, the Company recorded net profit attributable to shareholders of RMB5.9 bn, up 10.2% yoy. In 2024, the Company's overall HDT vehicle sales reached 243,418 units, up 7.2% yoy; average revenue/ unit of HDT jumped by RMB11,950, to RMB341,603, up 3.6% yoy; the overall LDT sales volume was 65,744 units, up 24.6% yoy, with average revenue/ unit of LDT increased by RMB6,455 to RMB97,870, up 7.1% yoy. The Company’s annual dividend payout ratio reached 55%.
New energy HDT sales surged, and Sinotruk seized the opportunity of structural transformation in the HDT industry. In 2024, Sinotruk's sales of new energy HDTs soared 294% yoy, and sales of new energy LDTs also grew by 50% yoy. The domestic competition landscape in the HDT industry is relatively concentrated, and last year's "trade-in for new" policy has boosted the recovery of domestic HDT demand. Emerging economies are still the main competitive market for China HDT exports. The industry's overseas competition is relatively less intense than the domestic ones, mainly dominated by several European giants. China's HDT exports continue to grow steadily. Sinotruk's exports have the following main features: 1) focusing on cultivating the African + Southeast Asian markets, while stabilizing the Russian market share; 2) actively exploring and exploiting the Middle Eastern, South American and Oceania markets. In 2024, China's HDT sales reached 901,700 units, a yoy decrease of 1.0% (from the high base in 2023). Sinotruk’s cumulative sales volume was 244,900 units in 2024, with total market share of 27.2% in China (+1.5 ppts yoy).
Export market demand witnessed a slowdown, but Sinotruk continues to optimize and enhance its competitiveness in overseas markets through: 1) stepping up its expansion efforts and exploring new marketing models with the help of its subsidiaries; 2) further expanding its market share in overseas markets leveraging its brand advantages and mature operating channels; 3) facing traditional market competition, achieving rapid sales growth by accelerating product face-lifting and responding to price and business policies; and 4) increasing penetration in high-end and key markets. As of 31 Dec. 2024, Sinotruk has established 80 overseas representative offices and other offices, developed more than 200 dealerships at all levels, and established 10 overseas subsidiaries and 29 overseas cooperative KD plants in more than 110 countries and regions. We expect the company's HDT export sales to be around 140,000 units in 2025.
Risks: 1) global economic recovery may be slower than expected; 2) overseas market expansion may fall short of expectations.