Automotive Industry: Focusing on the value of long-term growth of the leading stocks

Slightly better than the commercial passenger boom, the market structure in polarization

Seasonal factors and determined policies to promote economic slightly better than the commercial passenger vehicle, passenger car sales in August 2010 1,019,000, growth of 7.69%; commercial vehicle sales of 303,300, the Central than 1.83%. Meanwhile, demand for personalized promote gradual change in consumption structure, but also means that close to the market demand for products and businesses will fully benefit in the competition, the Volkswagen passenger car market in the narrow line with the general lines significantly increase market share in 2010 August Shanghai Volkswagen, FAW Volkswagen, Shanghai GM's market share reached 28.90%, the relative increase of 3.73 percentage points last year.

The industry's inventory is reasonable, "Kim nine silver ten" will proceed as planned

And to the current vehicle inventory cycle in August 57 days, of which passenger cars inventory cycle is 58 days.

We believe that the current state of the industry at a reasonable inventory and equipment manufacturers with the August inspection, the market inventory during the heating process is expected to remain stable. Before the third installment of "energy-saving products and projects that benefit" the directory has been published to promote energy-efficient cars with the policies we believe further guidance, sales of own brand will be further improved. Meanwhile, driven by domestic consumption upgrade, the demand for high-end market is expected to remain warm. We believe that passenger car market, "Kim nine silver ten" will Ruqierzhi. At the same time, we determine the course of heating demand in the market, the market price is expected to remain stable.

Concerned about the long-term growth of the value of leading shares

Logic of our investment in the industry is divided into three phases: the first phase of the medium-term strategy based on industry PE of about 8 times the valuation given to fix the valuation of the industry, providing the margin of safety to judge performance, the industry rating from "hold" adjusted to "buy"; the second stage, the terminal on the market based on our tracking of sales to determine the cut subsidies will drive the industry to the economy up by the valuation of repair; now in its third stage of the industry, we believe that the wealth effect can continue to promote the industry, optimize the product structure, leading to performance-than-expected growth is the focus of our concern, and the wealth effect is with the domestic stock market and real estate are closely related.

We are the market segments based on structural changes in the industry, and industry policies to guide the analysis, still choose a safety margin and the presence of event-driven company, including benefits in the passenger car market with new energy and industry, and the theme of Chinese domain car purchase ; gradual increase in the passenger car market share in the Shanghai automobile.

Risk Warning: systemic risk and policy guide below our expectations.